1921-05-12

[Stage Direction]
Sixth report of the select standing Committee on Miscellaneous Private Bills-Mr. Steele.
Seventh report of the select standing Committee on Railways, Canals and Telegraph Lines-Mr. Armstrong (Lambton).

[Stage Direction]
(Questions answered orally are indicated by an asterisk).

Mr. BOURASSA:: Why does the Government establish a difference, in the granting of a position, between the veterans who went over to Europe and those who were sent to Bermuda, by military authority, during the great war?


Hon. Mr. CALDER:: The Government is bound by the statute under which only members of the C.E.F. who have had active service overseas are entitled to the benefits of Section 39 of the Civil Service Act.
32G0


INCOME TAX
Mr. McMASTER:: 1.	What % portion of the Income Tax received during the' fiscal year ending March 31, 1919, was received in respect of taxes upon income for the calendar year 1917, or for the year of any corporation ending within said calendar year?
2.	What amount was received in respect of taxes upon income for the calendar year 1918, or for the fiscal year of any corporation ending within that calendar year?
3.	What was the total Income Tax revenue for the fiscal year ending March 31, 1920?
4.	Of this sum, what amount was collected in respect of taxes upon income for the calendar year 1917, or for the fiscal year of any corporation ending within said calendar year (1917)?
5.	What amount was collected in respect of taxes upon income for the calendar year 1918, or for the fiscal year of any corporation ending within that calendar year 0 918)?
6.	What amount was collected in respect of taxes upon income for the calendar year 1919 or for the fiscal year of any corporation ending within that calendar year (1919)?


Hon. Sir HENRY DRAYTON:: 1.	$9,350,209.72.
2.	None. The date for mailing assessments covering income realized during 1918 was October 31, 1919, which date was several months after the close of the 1919 fiscal year.
3.	$20,264,242.43.
4.	$4,717,303.84 under Income War Tax Act, 1917.
5.	$14,988,510.91 under Income War Tax Act, 1917.
6.	Returns under Income War Tax Act, 1917, covering income realized during calendar year 1919 were due to be filed on May 31, 1920, or two months after the close of the 1920 fiscal year. At the request of a number of taxpayers who were anxious to obtain receipted assessments previous to March 15, 1920, assessments covering calendar year 1919, which amounted to $558,427.68 were levied and paid.


CENSUS APPOINTMENTS
Mr. MacNUTT:: 1 By whom were the Census Commissioners appointed?
2. By whom are the Census Enumerators being appointed?


Right Hon. Sir GEORGE FOSTER:: 1.	The Minister of Trade and Commerce.
2.	The Census Commissioners, subject to the approval of the Dominion Statistician.
Mr. W. D. STAPLES


Mr. PAPINEAU:: 1.	Is W. D Staples a member of the Board of Grain Commissioners of Canada?
2.	Has the same W. D. Staples been recently appointed one of the Commission of Inquiry to investigate the handling of the Grain Trade of Canada?

3. If so, has the appointment been made in accordance with Sec. 6 of the Canada Grain Act?
Right Hon. Sir GEORGE FOSTER.
The answer to the first question is, yes.
The answer to the second question is, yes.
The answer to the third question is that it is not thought that such an appointment contravenes the section mentioned.


IMAGINARY LETTERS-SPEAKER'S RULING
Mr. SPEAKER:: In the course of debate during the sitting of May 10, the hon. member for Brome (Mr. McMaster) read a letter which he said was purely imaginary. The letter in question was addressed to Hon. F. B. McCurdy, Minister of Public Works, and signed by C. C. Ballantyne. A point or order was raised by the hon. member for Selkirk (Mr. Hay) as to whether it was competent to attach a member's name to an imaginary letter.
The situation was somewhat baffling and difficult to deal with at the moment, inasmuch as the question was without precedent so far as I have been able to ascertain, and, in view of the specific statement of the hon. member for Brome that the letter was purely imaginary, I did not at the time rule the proceeding out of order. Upon careful and mature reflection I am of opinion that if this incident is to stand, and a precedent thils established, a door would be opened for a grave abuse of the rules of the House and the general principles-which govern debate.
There are several objections to this method of procedure. It is contrary to the rules to refer to an. hon. member by name -and, in this connection, I desire to direct the attention of the House to the fact that there has been of late an increasing tendency to violate this most important rule.
Furthermore, the matter contained in a letter of this character, although said to be purely imaginary, cannot fail to convey a meaning and be capable of an interpretation which the hon. member affected cannot effectively deny, being precluded by the very nature of the letter; thus in effect an hon. member would be enabled by this indirect method to convey a meaning or impression which he would be precluded from doing by direct assertion.
There is still another very grave objection to this method, an objection which, to my mind, is sufficient in itself, namely, that the use of this method in argument will call for similar letters in reprisal, and

thus the door would be' opened to a method of debate which it would require no effort of the imagination to realize would affect most injuriously decorum in debate and the dignity of the House.
It is therefore in my judgment of great importance that the incident in question should not be construed as a precedent, and in order the more effectively to carry out this intention, I have issued instructions that the letter in question be not printed in the revised edition of Hansard. In justice to the hon. member for Brome, I desire to make it clear that he was most explicit in his statement that the letter was not only purely imaginary, but that it was not to be construed as having any personal reference to any member of the House. In this connection I quote the hon. member's words:
They are absolutely imaginary; there is no intention in my mind to assert for a moment that it is possible for the man, who i-s supposed to have written this imaginary letter to have really written it-I want that distinctly understood.
Indeed, I am happy to add that I have no doubt the hon. member for Brome had no ulterior motive in using the letter in question. This, however, in my judgment, only serves to strengthen the objection as to the danger inherent in such a course to which I have given expression.


Hon. Mr. MURPHY:: May I inquire, Mr Speaker, whether the ruling you have given might not in the future be regarded as a precedent that would be qpen to discussion if on another occasion something somewhat similar were to arise, not with reference to, say, an imaginary letter, but with reference to some other subject which might be the occasion of a ruling?


Edgar Nelson Rhodes: I do not know that I
quite apprehend the purport of the hon. member's question; perhaps he would put it in other words. What particular point has he in mind?	.


Charles Murphy: Well, I had not any particular point in mind at the moment, except this, Mr. Speaker. It seems to me that the ruling which your Honour gave is susceptible of such wide application that the occasion might arise when, without there being any such reason for the ruling as there may be in the present instance, another ruling might be given and matter deleted from Hansard without the opportunity of debate.


Edgar Nelson Rhodes: The objection that the
hon. member has in mind is so general in its terms that it hardly requires an
207	1 i ' -
additional ruling, if I may use the term, because the ruling which I have given would refer only to an incident similar in character to that with which it deals. Of course, it is open to the incumbent of the Chair from time to time to give his ruling as particular incidents may arise, subject always, of course, to its meeting with the approval of the House. If the hon. member has more particular reference to the circumstance of the Speaker ruling that a certain letter be deleted from the revised edition of Hansard, I may say that there are already precedents not only in the Canadian House of Commons but in the British House which give that authority to the Speaker.
PRIVILEGE-Mr. ROBB


Mr. J. A. ROBB (Chateauguay-Hunting-don):: Mr. Speaker, I think this is the
first time in twelve years' parliamentary experience that I have risen to a question of privilege. In debate yesterday, my hon. friend the Minister of Marine and Fisheries (Mr. Ballantyne), used this sentence as found in Hansard, page 3321:	[DOT]
To use t!he words of the hon. member for Red Deer my hon. friends opposite from the province of Quebec are something like Admiral Nelson- they always put the glass to the blind eye. They fraternize one with the other and can see nothing ibut victory ahead for themselves-they can see nothing but the maintenance of this "Quebec bloc." One of the sheep has jumped over the walls of the pen and is wandering loose at the present time;
Mr. Speaker, as a member from Quebec I resent the implication of being called a sheep. The Minister of Marine and Fisheries, perhaps unintentionally, conveyed an insult to the members from the province of Quebec, which he himself may regret. I wish that he would withdraw the statement.


Edgar Nelson Rhodes: The remark was not
heard by me, but I am sure, from the nature of the remark as quoted by the hon. member for Chateauguay-Huntingdon (Mr. Robb), that the reference was purely by way of illustration and was not intended to be construed as any reflection upon any hon. member of this House.


Mr. LEMIEUX:: Well, was it meant
to be a black sheep, Mr. Speaker?


Mr. MICHAUD:: Perhaps it was "entirely imaginary".


Charles Murphy: Probably it is the lamb of the member for Jacques-Cartier (Mr. Lafortune) grown up.


REVISED EDITION. COMMONS THE BUDGET DEBATE CONTINUED ON THE ANNUAL STATEMENT PRESENTED BY THE MINISTER OF FINANCE
[Stage Direction]
The House resumed from Wednesday, May 11, the debate on the motion of Hon. Sir Henry Drayton (Minister of Finance), that Mr. Speaker do now leave the Chair for the House to go into Committee of Ways and Means, and the proposed amendment thereto of Hon. W. S. Fielding.
Mr. F. L. DAVIS (Neepawa):: Mr. Speaker, in rising to discuss the Budget I wish to assure the Finance Minister of my sympathy with his difficulties on this occasion and to express also a realization of the fact that these difficulties are not of his making, many of them having arisen under a finance minister's administration with which I was not at all in agreement.
A year of falling prices; of appalling railway deficits after equally appalling freight-rate increases; of large unemployment, destined to grow worse; of one hundred millions of deficits; of expenditure in excess of revenue, lies behind us. And ahead of us seems to lie a year wherein all these will be aggravated. Last year $432,000,000 was raised by way of taxation, but this, the largest taxation we have ever collected, has not availed to make things meet. The ensuing year cannot be expected to yield like revenues, but will call for similar expenditures. The minister places the figures which should be paid out of current revenues this year at $435,000,000, to which should be added about $155,000,000 of expenditure on railways and upon active investments, so that we shall have a deficit, apparently, of about that amount after applying the ten millions of cash which we have in hand.
For the relief of some whose appetite for tariff discussion is satiated, I will say here that I am not going to discuss the tariff at length. In postponing action the minister, perhaps, is displaying discretion, taking that word in both its good and its bad sense. A party of Liberals and Conservatives that has not been through the fire of an election might prove uncertain under such a strain. I found myself in sympathy last night with most of the remarks of my friend from North Oxford (Mr. Nesbitt). But, as he told us that' England was not a free trade country, I thought he should discuss that matter with our friends from Frontenac (Mr. Edwards) and from Fort William (Mr. Manion) who seemed to hold other views upon that question. In the better

sense of that word " discretion " I think the minister would have displayed more, had he framed and arranged classifications in the tariff schedule and knocked off even a few excrescences just to show the country that the commission had not been entirely a waste of time. After the remarks in the West of the Minister of Immigration and Colonization, (Mr. Calder), there was felt to be need for such a demonstration. Nevertheless, in the state of trade, in th$ condition of United States legislation on tariff questions, and in view of our own political condition, the postponement has much to justify it, not the least being that the prospect is that quite different persons and quite different ideas will shape our next Budget.
I also agree with the elimination of the business profits tax. The time was ripe for that, as business has generally been experiencing a cutting down, a wiping out of values, which would certainly have affected collections under that tax. But the Finance Minister imposes a sales' tax. I think this is no time to show toe great friendliness or consideration for the big interests of this country, and I should like to make a suggestion with regard to the corporations' income tax. A corporation is treated under the fiction that it is a person, and after $2,000 exemption is allowed, 101 per cent practically is levied upon its yield. We have in this country many one-man corporations and these men may have very large revenues from such corporations. Under Section 3, subsection 4, of the Income Tax Act, the minister, unless he is satisfied that there is a need for retaining these funds in the hands of the corporation, may force them out-at least that is the course that he has chosen to pursue-into the hands of the shareholders. But I would point out that with the business profits tax eliminated, the machinery is now defective for his doing that. That is, having before him the earnings of a corporation and the names of the shareholders, he may allot a tax upon the amount which they should have received, had the profits been divided. I believe the question has never been settled whether he has a right to make such an assessment upon funds which the shareholders have not received. Under the income tax as it stands now, firms and partnerships must pay the full amount of the income tax, whether it has been realized in cash or not. No account is taken of the needs of a firm or partnership to extend its business, and I cannot, therefore, see why account should be taken of the needs of a corporation to

extend its business and use its reserve in that way. I grant at once that the minister could hardly make exceptions among firms or partnerships, but he should line up the corporations with the firms and and the partnerships, and I want to point out to him a method whereby that may be done. We have a 10J per cent tax upon a corporation as an income tax. Supposing that tax were levied as a minimum tax provided that the dividends of the corporation were distributed within three months of the end of the company year, and a further surtax were imposed upon the corporation if they did not so divide. The result would be certainly to force a distribution of the dividends, and the shears of the income tax would then catch these sums in the hands of the individual shareholders. Perhaps, even, it would be advisable to do this; still recognizing the corporation as an individual, to provide that no income tax shall be assessed if the dividends are distributed within a very limited time, but that a very heavy income tax shall be levied if the dividends are not distributed within that time. Then you will have these funds forced into the hands of the shareholders and thus brought under the income tax requirements. The objection may be raised that corporations need money to extend their businesses. The one-man corporation can meet that, because, having received the whole amount of the dividends, having paid his tax, he can put his money back into the corporation which is his property. If it is a com' pany of the ordinary description, if its shares are above par, it may offer its shares at a discount or at par, thus making a right in the shares which would be of value. Or, if the shares are at or below par, it may offer preferred stock at advantage and these rights could be sold. Therefore, there will not be that difficulty, which has been one of the objections to the business profits tax, that money for further expansion will not be available.
With regard to our shipping, I think it is deplorable that we had not a Lord Inchcape in Canada to sell our ships at the end of the war. Hon. members know that Lord Inchcape practically took 200 vessels over from the British Government and himself disposed of them. If England, the greatest shipping country in the world, saw fit to do that, surely some one in our Government should have been alert to what was good policy for the very "mistress of the seas" and been apt and eager to follow that example.	.
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I shall not now discuss our railways, because there will be a future occasion for that. I want, however, to point out that the railway situation perhaps affects our western provinces-and I believe in this case the charity begins at home-in a most acute form. We have to pay very heavy freight rates at any time to get our goods to the markets of the world, and we have to pqy heavy rates to get goods into that country. As an example of what has taken place in the way of change in prices in the last year, let this illustrate. The farmer in the West-and this was in the week before this session began-was selling his steers at 301 per cent decrease, his cows at 30 per cent decrease, his stockers at 38 per cent decrease, his hogs at 23i per cent decrease, and his sheep at 44 per cent decrease. He was selling his wheat then at 151 per cent decrease, his oats at 48 per cent decrease, his barley at 42 per cent decrease, and his flax at 66 per cent decrease. The freight situation had much to do with these large decreases. But on the other hand the farmer had to pay more for everything that he was buying in the way of machinery and equipment. I have in my hand, a list which includes buggy, democrat, wagon gear, grain tanks, trucks, gang ploughs, breaking ploughs, hay rakes, mowers, binders, blacksmiths' forges, and certain gasoline engines; and the total of these at the 1920 price is $1,775.20. In the catalogue of the week ending February 12, 1921, the retail price is $2,154.10, an increase of 21.31 per cent. Compare that with the decreases which he is obliged to accept, and you will see that he is facing very grave difficulties; and I say that these difficulties bear more heavily upon him because of the freight situation; hence there is even more necessity for a re-scaling of rates and an improvement in our whole railway situation. I should in justice, perhaps, point out that in one line of articles, harness^and I am sure my hon. friend from Red Deer (Mr. Clark) will appreciate this, after telling us that he has had to sell hides at 1 cent a pound-the price is down a little from $193.25, to $169, a decrease of 12.39 per cent. With these figures before the House I think it can realize somewhat, of the dissatisfaction that rests in the farmer's mind when he sees that he still has to pay large tariff taxation, as well as contributing in the measure he does to freight, taxation. As an instance of how and where the freights Come from in this country, it is general public knowledge that $33,000,000 was the surplus for all pur-
32C4

poses of the Canadian Pacific Railway last year. I want to tell the House, what perhaps it does not know, that of that surplus, $21,000,000 was produced upon western lines in the last four months of the year 1920; that is, practically two-thirds of the whole surplus was earned on the western lines of the Canadian Pacific in those four months.
A good deal has been said from time to time as to our grave adverse balance of trade with the United States. I would like to produce some comparative figures here to show that the situation is not nearly so grave as has been stated. In 1921 we exported to the United States $542,000,000 i of goods, and we bought from them $856,000,000 of goods; that is, our imports were equal to 155 per cent of our exports. In the year 1920, they were 173 per cent; in 1919, 164 per cent. During the war conditions were disturbed so that it is not fair to make comparisons with those years. The figures were less for three years of the war, and then going back to 1915, our imports were twice our exports, and the same is true of 1914. They were 2.64 per cent in 1913, and in 1912 they were three-fold. To reduce to proper values of the present, for our money in 1921 as compared with our money in 1912 is practically at an appreciation of 100 per cent, you would have to divide the figures of 1921 to get a fair comparison; that is, in those terms, the exports would have been $271,000,000 as against $428,000,000. Now, in 1915 that $428,000,000 is the amount of our imports, and in that year our exports were only $215,000,000 of goods. Consequently, I think that the situation is really improving, and that there is not such a need for fear as to the situation as has been very widely expressed.
A matter which should, perhaps, give us more concern is the question of exchange. We are now paying a premium of around 12J per cent upon American funds, and in our present situation this is really serious, especially when you take into consideration a matter to which I shall refer later on, that is the question of our loans. But this is to be remembered: that while a balance of trade against us would throw the rate of exchange against us, it would not account for the amount of that rate. What really accounts for the amount of the rate is the disparity between the purchasing power of our money and theirs. Compare wheat of the United States with that of Canada. Our wheat has been consistently quoted at a higher level than that of the

United States. That is a commodity which is in world-wide demand, and until the Young Bill, which passed the United States Senate yesterday, began to affect the situation, it was in no way affected by governmental regulations. Now, the fact is that it takes about $9 of our money to buy what $8 will buy in the United States, and that is the real cause, and the basic fact, to take into account in connection with our exchange. We have to-day to compare the purchasing power parities of money to know what we are doing in any trade. It is no use any longer following mint parities. Indeed, even the exchange is a misleading guide, because, during the war, exchange was kept up by the governments and was above the purchasing power of the moneys of the several countries; to-day, because of the disturbance of conditions, it is below the purchasing power of the moneys. If any one cares to follow that question up, I would refer him to the May number of the Commerce Monthly, issued by the National Bank of Commerce of New York, where he will get a bird's-eye view of the whole situation.
In consequence of this, I have to criticise the minister's proposition to limit the exchange variation to 50 per cent. With regard to some countries that is justifiable, particularly with regard to Germany, and if it were pointed straight at Germany I would support it. But as regards France, for example, we have recently entered into a treaty with France to give her certain advantages. Now, by this arrangement of exchange, we reach behind their backs and take away those advantages. At present the French exchange is around 8.14 cents, but the purchasing power of French money is above that point, and that, after all, is what counts in the question of exchange. Indeed, keeping in mind the functions of exchange, when we adopt a policy of this sort, we are providing means which carry us only half way in the complete circle of trade. We take it from French goods into currency, but it has to go the rest of the way, from currency into Canadian consumption, before you have the transaction complete; and in that case we take account of the purchasing power of the money and no injustice is done to us. Where England imposes a duty of 33J per cent in cases of this sort for the same purpose, the London Economist has this to say:
The exchange section of the resolution is still more fatuous; insofar as it is effective it will inevitably retard the recovery of central Europe on the need for which our rulers ha-ve so often and eloquently declaimed.

Our trade does not equal that of Great Britain with Europe, and so has not the pervading effect that such a restriction must have in English trade; but it has its effect, and it is a distinctly unfriendly act on our part to put upon the currencies of Europe such a limit. In dealing with this question, and in order that it may be understood, I propose to read some extracts from an address delivered by the Swedish economist, Cassel, delivered before the Brussels Financial Conference:
The part of the currency which has been exported to foreign countries is in some cases very important. The actual circulation within Germany is, e.g., much lower than the total mass issue, the rest being held in foreign countries. This must be taken into account if we wish to have an idea of the active circulation within Germany. In some cases it is necessary to have regard to an increase or a decrease of geographical area within which the currency is used. In the case of Germany, e.g., the present active circulation should strictly be compared with the pre-war circulation within the present boundaries of the country.
Now, Germany has been forcing her marks upon foreign countries, and this has amounted to floating a demand loan. The consequence has been disastrous to her own trade. Let me quote from page 47 of the same report:
war. In it, as in its two predecessors, there is no enunciation of general policy such as all circumstances demand. Parliament has, during this session, considered such proposals as the development of the St. Lawrence, involving an expenditure of half a billion dollars, as cheerfully as if in the last seven years we had not incurred a debt of two billions of dollars, changed our price levels more than commonly occurs in centuries of time, wasted a very large portion of our capital in waging war, and raised problems which cannot be settled by short views such as these last three Budgets have contained, but which must be met by some measure of vision and a policy having consistency and continuity for at least one generation.
Of our old obligations of nearly $300,000,000 about $25,000,000 falls due within the next four years, and of our new obligations of nearly two billions and a quarter, within the next four years, 25.7 per cent falls due. We have paid this year $25,000,000. Next year we have to pay $195,000,000; in 1923 the same sum; in 1924, $105,000,000, and in 1925, $43,000,000. That we may get this all before us, let us put it on record:
As instances of such depressing tendencies we can quote: a distrust in the future of a monetary standard, leading to a discounting of an anticipated fall of the internal value of the money; operations of speculators, etc. By far the most important of these depressing factors is, however, the practice of selling out the currency of a country abroad. This practice has, during the last year, reached such proportions and become such a prominent factor in the international monetary situation that it is necessary to devote special attention to it.	#
The whole operation can best be studied in the case of Germany. German marks have been
In 1926 we have to pay	
In 1927 we have to pay	
In 1928 we have to pay	
In 1929 we have to pay	
In 1931 we have to pay	
In 1933 we have to pay	
In 1934 we have to pay	
In 1935 we have to pay a little over
In 1937 we have to pay	
In 1938 we have to pay	
In 1945 we have to pay	
In 1947 we have to pay nearly.. . .
To recapitulate:

79.000.	000
483.000.	000
481.000.	000 1,000,000
345.000.	000
52.000.	000
65.000.	000 5,000,000
sold out abroad on an enormous scale, and at almost any price they would fetch# As the cen-	Between per cent.	1921	and	1925	we	must	pay	25.7tral Government, local bodies, banks, and business enterprises were in absolute need of foreign	Between per cent.	1921	and	1931	vve	must	pay	10.3means of payment, and these did not seem to be procurable in any other way, the country was	Between per cent.	1932	and	1935	we	must	pay	43.3driven to this selling out of its currency. The process must be looked upon as a substitute-a	Between per cent.	1937	and	1938	we	must	pay	17.7bad substitute indeed-for the more regular device of securing foreign loans. As lenders could	Between cent.	1945	and	1947	we	must pay 3	per
not be found, Germany turned to a new class of investors, the speculators in currency, and offered them, instead of a high rate of interest, the inducement of an extraordinary low rate of exchange. Of course, the speculators suffered heavy losses as the exchange went down step by step. But new ranks of speculators were always ready to believe that "the bottom has been reached" ; as a mantter of fact the last of them have made enormous profits. The selling out of marks is said to have been considerably increased by the endeavours to evade in this way an exorbitant taxation.
In considering the proposals of this year's Budget, there is one lamentable omission. This is the third Budget presented to the people of Canada since the
It is not within the contemplation of any one that we shall pay these debts as they come due, but large refunding operations must be carried through. It is wise, therefore, that we should keep these before us and prepare for them. We are in the third year away fron* the war, and no Budget has yet made reference to them. Let us look at some features of the situation. The United States is our greatest competitor, not only in trading but in obtaining increase in population. It is generally recognized by our statesmen that their conditions have a direct effect and

influence on our own. To obtain the growth in population we desire we must offer to our own people and to immigrants a similar standard of living, a comparatively decent rate of taxation, similar wages, and cost of doing business. At present I shall leave out of any such comparison the effects of a protection policy in which we collect about $20 per head in duties and they collect about $3, and endeavour to deal with other factors of the situation.
The United States floated its loans for about four and one-quarter per cent. We have had to pay rather more than five and one-half per cent. In the present and prospective dearth of capital, we shall do well indeed if we can refund our present indebtedness at the rate of 6 to 6i per cent, being one-quarter to one-third higher than the United States is paying for funds	for the same	purpose.
This is one of the great reasons why, at present, we should adopt the four recommendations made by the Brussels Conference-balance all recurrent expenditure with taxation; cut down all military expenditure; abandon all unproductive extraordinary expenditure; and restrict to the very minimum even productive extraordinary expenditure. The United States is the only prospective market for such refunding operations, and our money is at a discount of about twelve and a hallf per cent with theirs, so that if we borrow from them we must pay this difference upon the principal sums, and so long as we permit the difference in purchasing power parities of our and their currencies we must pay such premium upon the interest upon the sums borrowed.
Now let me quote from the New York Times financial edition:
As it is, leading financial experts believe that Canada will experience so much difficulty in taking care of the maturities prior to 1933 that there will Ibe little if any opportunity for building for the future-
That is, making preparation for taking care of these maturities.
-and in those years, or just before them, Canada is likely ,to make another big entry into the New York market. During the past year or so Canadian securities have been going better in the American market than ever before. A very considerable amount of provincial and municipal bonds and other securities have been sold here and, in addition, nearly $85,000,000 in Canadian railway issues, representing properties which are to ibe merged into the Canadian National Railways, have been disposed of to American investors. The discount on Canadian funds in the exchange market has been a factor, allowing American investors an immediate discount of 9 per cent to 14 per cent on the purchase price

with the chance that this will be entirely made up within the next few years and long before the maturity of these securities.
Now, that is a situation that we must face with regard to having our money on a disparity with theirs. If we borrow from them we must pay the difference, and so long as we suffer a difference in purchasing power on our money we must pay the difference in exchange upon United States interest.
I think it was the duty of the Government therefore, to lay this situation before Parliament and the country for its consideration, and to announce a policy and to devise ways and means for carrying out that policy. Under the circumstances, the obvious policy is first of all to put our currency on a par with United States currency as we are only about twelve and a (half per cent from such par. And as experts hold that Great Britain which is twenty per cent from par. and France which is thirty-five per cent from par, are able to, and should, bring their currency to par, the conclusion is inescapable that for us it is more attainable and more essential. Were it not mentioned, it might be overlooked that we are already borrowing over $200,000,000 a year from the United States, authorities stating that last year we borrowed $214,000,000, and the rates have been above six per cent. Provincial governments, municipalities and business firms have all been forced to the United States market for needed funds, and where, as is the rule, they are made repayable in the United States, so long as we permit our moneys to remain at a discount, we pay about one-eighth more interest and are repaying one-eighth more principal to cancel the debt. Surely this means that our business is at a disadvantage with United States business and that the way to correct this is to bring our money to a parity. My own small town is paying $1,500 a year to make up the diffier-ence of exchange. They borrowed $100,000, from a firm in Toledo some years ago and there are some other maturities they have in the United States, and they are paying $1,500 a year in exchange. This means very nearly one dollar a head of its population and a material increase in its taxation. Hence, I conclude that the Government's first duty is to balance its expenditure with taxation and secure surpluses with which to bring our money to equality with the United States money. The effect will be to cheapen money throughout Canada, and materially reduce the cost of carrying our debt in the future.

But with this must be coupled the necessity for establishing sinking funds, and we cannot establish sinking funds while we continue to expend; as the Finance Minister says, during the past year he has expended $100,000,000 more than the taxation has yielded him. Neither would any sensible person demand the establishment of sinking funds forthwith; but surely a Government conscious of its obligations would take the country into its confidence and say when it thinks such sinking funds should and can be started. This may be seven to ten years ahead, but a government which has determined upon the establishment of sinking funds and set a date for their establishment and shaped its expenditure and taxation to carry out that operation within that time, will be able to borrow money on much better terms than a government which is proceeding as this present Government is without an expressed realization of the situation or any declared determination to effect these purposes. Such sinking funds could be begun in time to have a most material effect upon the refunding operations at our second period of maturities in the early thirties. Such a detailed policy no future Government would dare to depart from, and with such a policy Parliament and the country would have a corrective and a tonic principle for its future guidance, and that is one of the great lacks in our present fiscal policy. Retrenchment of our expenditure would necessarily follow upon such a policy and Parliament would relegate to the future any scheme for expenditure which would conflict with such a dominating policy and principle.
The peroration of the Finance Minister, although it contains words of faith and confidence, does not appeal particularly to me; but had a policy been announced- such as I have tried here to outline-then I would say that faith and confidence in the Government, and in the future of Canada, is to be entertained. Unless such a policy is established it cannot be entertained.


Hon. HUGH GUTHRIE (Minister of Militia):: Mr. 'Speaker, in rising to address the House for a short time upon the motion now before the Chair, I feel that I should join with those who have preceded me in tendering to my hon. friend and colleague, the Minister of Finance, the congratulations to which he is entitled upon the splendid showing that he has been able to make in regard to the finances of this country, despite the fact that Canada has admittedly passed through the most distressing period in her history-a period not only distressing to Canada financially but distressing throughout the whole world.
It is a splendid tribute to the ability and care of the Finance Minister that after such an experience he can come before Parliament at the close of the financial year and announce that he has been able to meet all the ordinary outlay in respect of government out of the ordinary revenue and at the same time bring down a statement which shows what we call a surplus, amounting to something over $69,000,000. He is able to say in addition that not only has he paid all the ordinary expenses out of ordinary revenue, but he has been able likewise to pay as he went along no less a sum in round figures than $36,000,000 of capital expenditure, and a further sum of war expenditure amounting to $20,000,000, both of which large sums he has paid out of that surplus and still there remains over the handsome amount, having regard to the times in which we live, of $12,428,000 to the credit of the country. That, I submit, Mr, Speaker, is a wonderful financial showing made under exceedingly difficult conditions. I have been in this House a number of years, and I know in years gone by-ten, fifteen or twenty years ago-it was considered a very great triumph on the part of the Finance Minister to announce a surplus at the end of the fiscal year. I am aware there is a difference of opinion tes to whether the surpluses that for many years have been announced in this House can be considered as real or more or less imaginary, but I believe that from Confederation down to the present time it has always been considered a privilege for the Minister of Finance to announce a surplus at the end of the financial year's operations when his ordinary expenditure was less than his ordinary revenue, notwithstanding the fact that during the same year it had become necessary to increase the national debt. On the one hand, on the annual operations we had saved some money, while, on the other hand, by way of capital expenditure we had increased the net debt'. But notwithstanding the increase in the net debt, it has always been the privilege of the Finance Minister to claim as surplus anything he has been able to lay aside on the year's operations as between ordinary revenue and ordinary expenditure.-
The most outstanding fact at the present time, I think, is that during the past twelve months the Finance Minister has found it possible to declare a surplus under the conditions which have existed in this
32G8

country. I believe that for a good many years past, omitting the war years, annual surpluses have been rather the regular thing than the exception; while I think I am also within the mark when I say that during the past twenty years additions to the net debt of Canada have been the rule rather than the exception, even during those years when our largest surpluses were produced. I have a few figures on the subject culled from the public accounts, and I find that the hon. member for Shelburne and Queen's (Mr. Fielding) who for fifteen years was Finance Minister, namely, from 1896 to 1911, was able by good and careful management during many years of that period to come to Parliament and announce a surplus. But I find that during those fifteen years my hon. friend as Finance Minister could only in four years of the fifteen say to Parliament, "I have made no additions to the net debt of Canada." During eleven of those fifteen years out net debt was considerably increased, while, in many of those same years surpluses were announced and cheered in the House and congratulations were tendered to my hon. friend. But I find that the net result of those fifteen years was that notwithstanding the surpluses the national debt was not reduced but as a matter of fact was increased to the tune of about $82,000,000.
Now, Mr. Speaker, my object in going into this matter as I have done at this moment is to lay a foundation for the course which I intend to pursue during the rest of my remarks. I do not know that I should have ventured upon the Budget discussion at all were it not that my hon. friend from Shelburne and Queen's-who appeared this week in the role of the chief financial critic of the official Opposition and delivered a speech in reply to the speech of my hon. friend the Finance Minister in presenting his Budget-at the very opening of his remarks extended to me something like an invitation, or perhaps I might term it a challenge, by direct reference to certain recommendations which were made at the International Financial Conference last September at the city of Brussels, particularly to those in regard to naval and military expenditures, and which conference I attended as a representative of Canada. My hon. friend the exFinance Minister quoted from those recommendations, and his quotation will be found at page 3251 of unrevised Hansard in these words:
The President: The third psrt of the resolution says: It is imperative that every Govern-[>Mr. Guthrie.!
ment should, as the first social and financial reform, take the following steps:
(a)	Restrict its ordinary re-current expenditure, including the service of its debt, to such an amount. as can be covered by its ordinary revenue.
(b)	Rigidly reduce all expenditures in armaments in so far as such reduction is compatible with the preservation of national security.
(c)	Abandon all unproductive extraordinary expenditure.
(d)	Restrict even productive extraordinary expenditure to the lowest possible amount.
Such was the language of one of the resolutions passed by the Brussels Conference. In regard to it my hon. friend commented as follows:
This resolution was carried unanimuosly, and approved by the Government of Canada through the Minister of Militia who, as I have said, was present. I deeply regret to say that though the Government of Canada supported that excellent proposal at Brussels, they do not seem to be willing to support it at Ottawa.
I maintain, Mr. Speaker, that in every particular the Government of Canada has lived up to the Brussels recommendations. I do not need to dwell upon paragraphs (a), (b) or (c), but I do intend to dwell upon paragraph (d), the recommendation of which was in the following language:
Rigidly reduce all expenditures in armaments in so far as the reduction is compatible with the preservation of national security.
I do so more particularly, Mr. Speaker, because I find that not only in the Houie of Commons but also on the part of the press of the country there exists what I believe to be a thoroughly uninformed, thoroughly misinformed, thoroughly ignorant condition of the public mind in regard to the militia, naval and air expenditure of Canada. My desire, in the statement which I make to the House to-day, is to give the House and, if possible, the country, if my remarks reach so far, an accurate statement of the situation, and let the House and the people judge of it for itself or for themselves.
I know there is a vast amount of misinformation on this subject. I know it from statements made in this House from day to day. During the course of the present debate two hon. members opposite have challenged the militia expenditure of this country at the sum of $20,000,000. Pretty high, I assure you-but seven or eight millions over the mark; an increase of 70 or 80 per cent over the actual expenditure. I have seen it stated in the newspapers throughout Canada that the military expenditure of the country has reached $30,000,000. I have heard criticisms in this House from my friends of the Agrarian group which had no foundation whatever in fact, and I am sure that if hon. members sitting in the Agrarian

group knew the facts they would not make the statements that they have made. I have had requests from labour bodies throughout Canada, from deputations, asking me to state particularly what the expenditure was and to what it applied. I am able to-day, I think, to give the House fairly full information upon that subject. But I am going to say this-and I am sorry that my hon. friend from Shelburne and Queen's (Mr. Fielding) is not present-had my hon. friend carefully perused the report of the Brussels Conference, which he had before him, he would have found in volume 4 of that report most abundant refutation of every criticism he made, and most complete justification of the position of Canada and of the Government of Canada in connection with the recommendations of the Brussels Conference.
Now, I do not care what viewpoint the House may adopt in examining the military expenditure; I do not care through which avenue they may approach it. I make this challenge: that viewing it from any angle you like, approaching it from any avenue of criticism you like, the position of Canada in regard to military expenditure is unassailable. It is superior to that of any other country in the civilized world to-day, and is so immeasurably superior that one can hardly make comparisons. I go further; I would say to my hon. friend from Shelburne and Queen's, were he here, that Canada of all the nations who attended the Brussels conference is perhaps the one nation which has sought successfully to carry out the recommendations of that conference. I propose to prove this by our own accounts, by our own Estimates, and by the figures of the Brussels conference which* my hon. friend from Shelburne and Queen's had before him when he spoke.
Ever since Confederation we have had military expenditure in Canada. I could take you year by year from Confederation to the present, but there would not be much advantage in going back to that early period. If we merely make a comparison of the figures as between to-day and ten, fifteen or twenty years ago, we shall not gain very much valuable knowledge from the mere comparison of figures unless we start out with something like equality of conditions. In making any comparison as between to-day and ten, fifteen or twenty years ago, we must always bear in mind, first, the purchasing power of our money as between now and then; second, the wealth of our country; third, the population of our country, and fourth, the necessity of guarding or securing the wealth
of the country-what it was then and what it is to-day. These conditions, I say, must be present in the mind if we are to make any useful comparison for the purpose of finding out whether our proposals of today are to be deemed extravagant or thoroughly economical.
The most important condition to observe in this connection is the comparison so far as the money value of goods is concerned. What I state now I stated during the debate on the military Estimates: namely, that it takes just two dollars to-day to procure for the militia what it took one dollar to procure in pre-war years. In saying this I am sure that I am well within the mark. We have to buy a great deal of clothing; clothing has advanced more than 100 per cent. We have to buy a great deal of food for the Permanent Force and for our militia in the-camps; food has advanced more than 100 per cent. The pay of our men in the militia has advanced from 50 or 60 cents, as it was in pre-war days, to $1.25, the minimum to-day. The pay of our Permanent Force has advanced from 80 to 90 cents in' pre-war days to $1.70, the minimum to-day. Our railway transport has advanced, not 100 per cent, but almost that, I am told. I am therefore, well within the mark when I say that prices as between pre-war days and to-day have advanced 100 per cent for all the requirements of the militia of Canada. Now, what does it mean? It means that the vote which we ask from Parliament today to carry on the militia of Canada, about $11,800,000 odd, would represent in pre-war days a vote of about $5,900,000 odd. Now, is that not stating the matter fairly? Bearing that in mind; having regard to the purchasing power of our dollar to-day compared with what it was before the war, we are brought back to the basis of the military expenditure of this country in the year 1905, which amounted to $5,678,000. To say that we have merely gone back to pre-war expenditures is stating less than half the fact. We are back to the basis of 1905. I have a tabulation of our expenditure in pre-war years. I have included in that statement only the ten years prior to the war and excluded the year 1914, as during'that year, after the month of August, our expenditure was a war expenditure. But beginning with the year 1904 and ending with the year 1913, both inclusive, I can make a comparison, and I propose to make it as a record on Hansard. May I ask, Mr. Speaker, that in giving these tabulations, which involve a great many figures, I be permitted merely


S270 COMMONS
[Stage Direction]
to comment on them and to give the general result, and that the complete statement be placed on the pages of Hansard?
Mr. DEPUTY SPEAKER:: A list
of figures which has not been actually read in the House can only be inserted in Hansard by unanimous consent. I feel sure, however, that under the circumstances that consent will be given. Is it the unanimous consent of the House that
the figures referred to by the hon. minister be inserted in Hansard without being read in their entirety? Carried.


Hugh Guthrie: 
Mr. McKENZIE KING:: What about
the Mounted Police?


Hugh Guthrie: I exclude in all my
calculations the North West Mounted Police. In all my calculations and statements for the last ten years under Liberal regime, I excluded the Mounted Police. Had I included them, the proportion would have been considerably higher. I have likewise excluded the Mounted Police in my second calculation, for the reason that the Mounted Police Force has been maintained in this country from its inception to the present time as a non-military force, as a police force. The provinces maintain police forces; so do the municipalities, and we do not look on them, we have never treated , nor considered them, as a military force in any sense of the term. The Mounted Police Force is not in any way under military control; it is not under the Department of Militia and Defence. What have I included for the purpose of my statement?
I have taken the whole proposed militia expenditure as shown at page 31 of the Estimates, $11,890,000. I will generalize on this statement in the same way as before and ask that I be permitted to place it on Hansard.
Statement showing Expenditure on Defence by the Principal Countries of the World for which Figures
are Available.
Population
Canada (see footnote *)..
Australia	
New Zealand	
Union of South Africa -
United Kingdom	
United States....;	
Argentine Republic	
Brazil	
Chile	
Denmark	
Holland	
Japan	
Norway	
Portugal	
Spain	
Sweden	
Switzerland	
(a) 9 5 1, 1, 40, 105, 8, 27, 3, 2, 6, 57. 2 5
5
000,000
000,000
200,000
276,242
000,000
000,000
279,159
000,000
945,538
921,000
778,699
070,936
,632,010
,957,985
,719,598
,813,850
,937,000
Military
11.890.000 13,874,998
2,876,638 (Whites only) 477,000,000 (6)639,275,503
13.500.000 36,846,864
14.225.000
21.250.000 16,210,228
8,730,000 44,228,346 (c) 29,841,916 (e) 67,428,914 8,689,450
Naval

2,500,000
14,062,500
1,688,499
(a)
371,155,500
644,515,731
9,020,749
17,081,963
6,000,000
8,250,000
17,000,000
3,803,975 12,803,803 (d) 20,541,564 (ft 14,095,930 Nil.
Air.

825,000
2,700,000
85,650,300
95,000,000
12,500
Total.
15.215.000 30,637,498
4,565,137
7,089,619
933,805,800
1,378,791,234
22,520,749
53,928,827
20.225.000 29,512,500 33,210,228
272,141,500
12,535,975
57,032,149
50,583,480
81,524,844
8,689,450
Per
Capita.

1-	69 613
3-	80 5-55
13-	13
2-	72 2-00 5-06
10 10
4-	08 4-77 4-76 9-58 2-43
14-	03 2-20
(a) Estimated. (6) Exclusive of expenditure by individual States on State Militias (National Guard).
(c)	Exclusive of $18,852,556 budgetted for military activities in Morocco.
(d)	Includes one-sixth of a building programme of $50,000,000 to be spread over six years.
(e)	Includes Special Expenditure for Defence amounting to $33,923,739.
(J) Includes Special Expenditure for Defence amounting to $5,534,030.
Normal figures for France are not available.	.	,	.
The average expenditure, per capita, for the above-named countries, exclusive of Canada, works out
Estimating population at 8,500,000 expenditure per capita equals $1.79.
"	"	8,000,000	"	"	"	$1-89-

This statement covers so many figures that I would only weary the House by reading them all. I have included the whole item of militia expenditure.' I do not deduct from the militia expenditure, and I might well deduct from it $350,000 for the Royal Military College, an educational institution for a civilian education to a much greater extent than for a military education. I do not deduct from the amount, and I might well deduct from it $450,000 for physical training of our high schdol cadets. I do not deduct from the amount, and I might well deduct from it $45,000 for topographic survey, which is thoroughly civilian in character, because all the departments and many municipalities get our maps and very few of our military officers use them. These three items aggregate about $840,000. Then I take the whole of the cost of Naval Service appropriation, $2,500,000, as shown on page 48 of the Estimates, and the whole of the Canadian Air Force appropriation as shown on page 61 of the Estimates, $825,000. I do not take the Civil Aviation appropriation, because that is purely civil. Therefore, the total amount for defence purposes which this Government proposes to expend is $15,215,000. What is our population?- because I am going to put this proposed expenditure to a per capita test. What is it fair to place our population at? The Minister of Finance, in his Budget speech, took it at 9,000,000 persons. We will take it at that figure first; and at 9,000,000 persons, the result is that the total proposed expenditure for all defence purposes in this country is the comparatively insignificant sum of $1.69 per capita. If it be thought that 9,000,000 is too high a figure to place upon our population-and we will not know the census returns until after June-cut it down; take it at
8,500,000	people. That would make the per capita expenditure $1.79. It may be that also is too high. Take it then, at
8,000,000 people, and surely we are justified in that assumption. [DOT] The per capita expenditure then, for the whole defence of Canada, military, naval and air, would be only $1.89, an insignificant amount surely. But if some one insists that we should add to that the Mounted Police expenditure, add $3,500,000 for the Mounted Police, or 45 cents per capita. I object to the Mounted Police expenditure being added as "military" expenditure; but if we are warranted in adding it, do so, and we shall still have a smaller per capita 
expenditure than any other country in the civilized world. How are we going to establish whether we are spending too much or too little on the defence of our country? Would it be fair to look around and see what other countries are doing; would it be fair to look around and see what the other British dominions are doing? That might be a fair comparison to make, and if we make it, what do we find? The figures contained in the statement whicn I have placed on Hansard have been compiled from records in the Militia Department by very expert officers, from information which comes through the Intelligence Branch of the department, and I think the figures are both reliable and up to date.
For comparison I go first to Australia, The estimate of population in Australia today is 5,000,000. Expenditure for militia $13,800,000 odd, just about $2,000,000 above us; naval expenditure is $14,000,000, about $11,500,000 above us; air force in Australia, $2,700,000, as against $825,000 for Canada; or a total defence expenditure in Australia of $30,637,000, equal to $6.13 per head of population, as against only $1.69 per head in the Dominion of Canada.
Now let us take New Zealand. New Zealand has a population estimated at
1,200,000.	Military expenditure stands at $2,876,000; naval expenditure, $1,688,000; no air force; total for defence $4,565,000, equal to $3.80 per head in little New Zealand as compared with only $1.69 per head in the great Dominion of Canada. '
Next let us compare the expenditure in [DOT]the Union of South Africa. The only estimate of population given for South Africa contains a note, that it represents the whites only. It does not take into account the tremendous native African population. The white population is estimated at 1,276,242. The figures show no naval expenditure; no air expenditure; military expenditure $7,089,000, equal to $5.55 per head of white population as compared with only $1.69 per head in Canada. These are our three great sister Dominions, and Canada in comparison with them occupies a wonderfully satisfactory position, in regard to military and naval expenditure.
If you take the per capita basis as a fair basis of comparison-I do not think it is, in every respect, because when I read down the list I find that other countries, Brazil, for instance, with a tremendous native South American Indian population, have a very low per capita charge, but I am going to give these figures, in the first instance upon this basis.

In the United Kingdom the figures are somewhat alarming. The United Kingdom has an estimated population of 40,000,000. Military expenditure calls for $447,000,000; naval expenditure $371,000,000; air expenditure $85,000,000, or a total of $933,000,000, odd, equal to $23.35 per head of population.


Rodolphe Lemieux: I do not question the figures given by my hon. friend, but there is justification for the figures in the case of South Africa; I know whereof I speak. There is a constant danger there of a native revolt.	[DOT]
Mr1. GUTHRIE: I would rather not be interrupted now. If my hon. friend will let me finish, he can then make his statement. There may be special reasons which can be urged in every country in the world, but there is this to be said: no matter how you view it, Canada has still the lowest expenditure in the world.
I have given the figures for the British Dominions and the Mother Land, save India. I have not got the figures for India upon a per capita basis, because I have nothing reliable in regard to her population. I have the expenditure of India upon another basis, in another statement which I propose to submit.
Coming back to North America, I may say that there are no Mexican figures available that are of any value. Nor have I included in the statements the small Central American states around the canal zone, because I have not been able to obtain information which is reliable as to them; I do not think there is any regular military or naval organization at all in some of these small states. I come now to the United States. The United States has a tremendous programme for the immediate future. The estimate of population is placed at 105,000,000. The proposed expenditure by the Federal Government on its army is $639,250,000; navy, $644,250,000; air force, $95,000,000-$10,000,000 more than Great Britain. The total expenditure is $1,378,000,000, equal to $13.13 per head of population, and this huge sum excludes the tremendous expenditure that is made in the United States by the various states themselves for the maintenance of what they call the State National Guards. Exclusive, of state expenditure the per capita charge is $13.13 per head in the neighbouring republic as compared with $1.69 per head in the Dominion of Canada.
Next let us turn to South America. The Argentine is a great republic. Its population is estimated at 8,279,000 odd; army expenditure stands at $13,500,000; naval, $9,000,000; it has no air force. Total expenditure, $22,500,000 odd or $2.72 per head of population, or $1.03 per head more than Canada. Brazil's per capita expenditure is reduced very much by reason of her large native population. She claims a population of 27,000,000; military expenditure calls for $36,846,000; naval expenditure, $17,000,000; no air expenditure. Total expenditure for defence nearly $60,000,000, yet on the per capita basis it is only a little over $2.
Chile comes next with a population of 3,900,000; army expenditure, $14,000,000 odd; navy, $6,000,000; or a per capita expenditure of $5.06. These are the only South American countries for which I have statistics. Several other South American republics submitted their returns to the Brussels Conference and these are printed in the report, but these returns do not give the military and naval expenditures of many of the South American countries. Let us next go over to Europe. Denmark with a population of 2,900,000 spends on its navy, $8,000,000; army, $21,250,000. It has just started an air force with an expenditure of $12,500; its per capita expenditure is $10.10.
Holland, with a population of 6,778,000, spends $16,000,000 odd on its army, $17,000,000 on its navy and air force

the figures are not separated-or about $4.88 per head of population.
Norway, with a population of 2,632,000, spends on its army and navy about $12,000,000, or $4.76 per head of population.
Portugal, with a population of 5,900,000, spent $44,000,000 on its army, and $12,000,000 on its navy, or a per capita expenditure of $9.58.


Mr. MACKENZIE KING:: For what
year are these figures?


Hugh Guthrie: For last year.


Rodolphe Lemieux: There is a revolution in Portugal practically every month.


Hugh Guthrie: I fancy that accounts for their heavy expenditure. Spain claims a population of 20,719,000. It spent $29,000,000* on its army, and $20,-
500,000	on its navy; no air expenditure. By reason of its large population its per capita expenditure is only $2.43 while its

total expenditure for defence runs over $50,000,000.
Sweden, with a population of 5,800,000, has an expenditure of $67,000,000 odd on its army, and $14,000,000 on its navy, or a per capita expenditure of $14.03.
Switzerland, with a population of
3,937,000,	spent on its army, $8,600,000 odd; no naval expenditure-it has no navy-and no air expenditure. Its per capita expenditure is $2.20. This per capita statement does not give the figures for other European countries.
The reason for that is apparent I think. The other countries, or most of them, are hardly yet reduced to what one might call a peace basis. Reliable figures were not furnished at the conference from Germany, from Hungary, from Poland, from Finland, from Greece, from Lithuania, or any of the other central European countries, and Russia was not represented at all. But I have given the House now a statement on a per capita basis, of all European countries which are more or less restored to a peace basis; and taking that whole list of countries in Europe, as well as those of North America, South America, the British dominions and the Mother Land, Canada is so far below the per capita expenditure of any other country, in the world as to make the other countries, by comparison, look extremely extravagant in regard to military and naval expenditures. I realize, Mr. Speaker, that the per capita test is not always the safest or fairest test. It is not in the case of Brazil, nor would it be in the case of India. I do not know that I should like to adopt it as the only test in regard to the Dominion of Canada; but so well am I borne out in my contention by the actual figures that I am prepared to adopt any test which the House mhy ask me to apply, and still Canada's position will be pre-eminent. Now, the test which I adopted as applicable to the regime of my hon. friend from Shelburne and Queen's (Mr. Fielding), when he was Minister of Finance, was to ascertain the proportion paid for military expenditures, having regard to the total revenue of the country from year to year. The ordinary annual revenue of a country forms a fair indication of the wealth of a country, although I admit it is not in any sense a conclusive test. However, it is some indication of a country's position and
not a bad test to apply when you are making comparisons in matters of national expenditure. When you settle your military programme, you have regard to the number of people in the country and their condition; you have regard to the wealth of the community, to the actual and pofential wealth of the country, and, as well, to all other matters which should influence the decision of a government in establishing a military or defensive system in any country and providing the money therefor. Consequently, I take the annual revenue as a reasonable basis and apply the test, and applying such a test I find that last year the ordinary revenues in this country, as announced in the House last week, were $432,000,000. I then take the Estimates of this session and find that the expenditure proposed for this year for military, naval and air purposes is $15,215,000, or just 3.5 per cent of the revenue. In other words, out of every $100 which will come into the treasury in ordinary revenue this year, based on last year's figures, we shall spend $3.50 for the whole defence of the country, while in the year 1911, when my hon. friend from Shelburne and Queen's presided over the treasury of the country, of every $100 that came into the treasury $9.50 was spent for defensive purposes. What troubled my hon. friend in his criticism of military expenditure was lack of information; what troubled him also-and we can excuse it-was lack of industry. Had he fully read the report of the Brussels conference he would have found the figures and all the information which I now propose to give to the House. He evidently perused only part of the report; he had not concluded his perusal before he made his speech. I now beg to submit to the House another comparative statement which I desire, for the information of hon. members, to place on Hansard. I will only summarize it. This statement, I may remark parenthetically, is given in the current coin of the respective countries; it is not necessary that it should be reduced into the dollar currency. These figures are for the year 1920-21 as supplied to the Brussels conference, and I have placed, for ready reference, opposite the name of each country, the page in the report of the conference where the figures appear. '
[Mr. Guthrie. 1


FROM VOL. IV-INTERNATIONAL FINANCIAL CONFERENCE
[Stage Direction]
Percentage of Expenditure for Defence compared with Total Revenue based on Figures for 1920-1921
-	British Dominions	Revenue	Expenditure for Defence	%P. 73	.'	$ 432,000,000 £ 49,905,000 £ 27,713,000 £ 27,967,000 £ 134,800,000	$ 15,215,000 £ 3,795,000 £ 3,968,000 £ 1,386,000 £36,482,000	3-	5 7-6 14-4 4-	9 28-
P. 89					
P. 93					
P. 83					
				
(Note figures for Canada are based on Revenue for years ending March 31, 1921, and estimated expenditure for the following year.)				
-	European Countries	Revenue	Expenditure for Defence 1920-21	%P. 65	£ 1,418,000,000 Lire 26,960,000,000 Francs 24,770,000,000 " 9,300,000,000 Goulden 733,113,000 Pesetas 1,842,720,000 Francs 412,812,000 (1919.) Kronen 929,400,000 " 759,785,000 " 427,700,000	£ 230,429,000 L 5,370,000,000 F5,118,000,000 F 737,000,000 G 84,902,000 P 707,216,000 F 196,905,000 K 197,942,000 K 61,572,000 K 63,900,000	16-3 201 20-7 7-	9 11-6 38-4 (a) 4921-3 8-	1 15-P. 53	P. 43	P. 39	P. 99	P. 105	P. Ill	P. 117	(Federation.)	P. 123	P. 129	
(a) Of this amount expended in 1919 F. 144,000,000,000 was for mobilization.
See figures for the following countries in same Vol. IV as follows:-
Finland	Page 135
Czecho-Slovakia. Esthonia...
Greece....
Latvia.___
Lithuania..
Poland....
Roumania. Germany..
Austria___
Hungary... Bulgaria...
143
151
159
167
177

[Stage Direction]
South American Countries	Revenue	Expenditure for DefenceArgentine Rep	
Brazil	
Chile	
Uruguay	
Asiatic Countries. China	(1919) Japan	(19-20) Siam	(20-21)	Pesos 428,100,000 Milreis 633,711,000 (Gold and Paper) $ 300,200,000 $ 38,044,000 $ 490,000,000 Yen 1,064,191,000 Ticals 72,500,000	P 62,701,000 M 143,100,000 $ 98,826,000 $ 7,270,000 $ 207,832,000 Y 544,283,000 T 17,920,000
327C
[Stage Direction]
From this table it appears that Australia with a revenue of £49,905,000, 'spent £3,-
795,000	for all defensive purposes, or 7.6 per cent of its whole revenue while Canada spends only 3.5 per cent. New Zealand, with a revenue of £27,000,000 odd, spent £3,968,000, or 14.4 per cent of the whole income of that country was devoted to military and naval expenditures as against Canada's 3.5 per cent. South Africa, with a revenue of £27,967,000, spent £1,386,000, or 4.9 per cent of the total revenue. Now we come to another great Dominion. India, with a revenue of £134,000,000 spent £36,000,000 for defensive purposes, or 28 per cent of the total revenue of the Indian Empire. The figures I give for Canada, I may say, are based on the revenue for the year ending March 31 last, and the figures in regard to our expenditures are in the Estimates now before the House.
Now, I propose to examine the expenditure of some of the European countries on the same basis. The United Kingdom, with a revenue of £1,418,000,000, spent £230,-
429,000,	or 16.3 per cent of her total revenue for defence purposes. Italy spent
20.1	per cent, for purposes of defence; France, 20.7 per cent; Belgium, 7.9 per cent; Holland, 11.6 per cent. Spain, with its small per capita expenditure, expended on her army and navy 38.4 per cent of her total revenue; while Switzerland, on last year's figures spent 49 per cent of her revenue to maintain her army; she has no navy. This, I may say, does not take into account the Cantons of Switzerland, but merely the Federation. Sweden, with an income of 929,400,000 kronens, spent 197,-
942,000	kronens on her army and navy, or 21.3 per cent. Norway spent 8.1 per cent; Denmark, 15 per cent on defensive purposes.
Take the nations of Europe, running from the lowest, 7.9 per cent, to the highest, 49 per cent of the total revenues of those countries are expended on armaments for the maintenance of armies and navies. Is it any wonder that the conference of Brussels made a recommendation on the question of further expenditures on armaments?
An hon. MEMBER:: Hear, hear.


Hugh Guthrie: 
REVISED EDITION. COMMONS
[Stage Direction]
cent. These are all the European countries in regard to which I am able to furnish figures. For South America: in the Argentine Republic 15.6 per cent of the whole expenditure is for the army and navy; in Brazil 26 per cent of the whole expenditure is for defence; in Chili, 43 per cent of the expenditure is for defence; and in Uruguay, 17.7 pr cent. Now let us take Asia:	in China, 41.9 per cent
of the total expenditure is for the army and navy; in Japan 47.9 per cent of the total expenditure; and in Siam, 20 per cent of her whole expenditure.
We have wended our way through North America and South America, through Europe, through Asia, we have touched on Africa, and we have looked in upon the larger islands of the 5 p.m. Pacific ocean in our search for comparisons. Make what comparison you deem proper, frame it from any viewpoint you desire, in every instance the position of Canada upon the question of military and naval expenditure is so outstanding, so pronounced and so satisfactory it should silence all criticism on the subject. I do not know, Mr. Speaker, that I need deal further with that question.
I had the honour of attending the Brussels Conference in September last, and I was a party to the resolution which my hon. friend from Shelburne and Queen's has laid before the House. I came home from the conference imbued with the idea that one of the greatest curses in the world to-day was military expenditure. I came home as fully determined as possible to plunge the knife into the military expenditure of this country so long as I did not go below the line of safety. I am disclosing no secret information which I should not make known when I inform the House that when the Estimates of the Militia Department for the present year and for the present requirements of this country were submitted to me in the first instance-Estimates not prepared extravagantly or elaborately, but merely providing for what in ordinary times one might call the absolutely necessary military requirements of Canada-when all the various branches of the department had made their requests, the aggregate was almost $17,000,000. This was the amount we should have had to ask for to keep up just the ordinary, pre-war, peace-time military establishment. My hon. friend from Shelburne and Queen's expended for this purpose away back in the year 1905 the sum of $5,678,000 upon the militia. If the purchasing power of the dollar in 1905 was

upon the basis of the dollar to-day it would have required an expenditure of over $11,000,000 to carry out the modest programme of 1905.
Mr. SINCLAIR (Guysborough) :: Are my hon. friend's calculations based on the existing rate of exchange in the European and Asiatic countries?


Hugh Guthrie: They were prepared by very expert officials, but I cannot give my hon. friend the information he seeks. I can tell him this however-the figures presented at the Brussels Conference are the figures which each nation furnished from its own Treasury Department, and in all these calculations I have given the figures in the currency of each country, making the comparison by percentages which absolutely avoids the question of exchange.


John Howard Sinclair: I do
not think my hon. friend understood my question. Take the case of Great Britain, a pound in Great Britain is worth approximately $4.


Hugh Guthrie: I gave the figures for
Great Britain in pounds sterling.


John Howard Sinclair: Is the calculation based upon what the pound is worth to-day or on $4.86, the normal rate of exchange?


Hugh Guthrie: I think my hon. friend
must have misunderstood me. The tota expenditure of the United Kingdom is on6 billion and some odd pounds. Its army anc navy expenditure is 230 million odd pounds. The ratio is 16.8 per cent; it does not affect the question of exchange.


William Lyon Mackenzie King: What about a per capita
basis?


Hugh Guthrie: In that instance the
figures are upon a dollar basis. The figures are given in the currency of each country in the second and third statements dealing with percentages.


John Howard Sinclair: It is the per capita basis that I have reference to.


Hugh Guthrie: I could get that information, but I do not happen to have it under my hand now. However, the point I make is this: That I have resolutely endeavoured to cut down military expenditure in Canada. I was impressed with what I heard, and with what I saw at the Brussels Conference, and I deliberately determined to cut down this expenditure in every

reasonable way. Not only was it my own determination to do so but it was by positive instructions from my leader the right hon. Prime Minister. I had little alternative in that respect; I not only cut the expenditure down because it was in accord with my own judgment, but also because I was positively instructed to do so. A serious question is, have I cut it below what I should have done? I do not desire to say anything unkind about certain criticisms which are offered in this House from time to time in regard to military expenditure, although I do think much of this criticism arises very largely through a lack of information on the subject. I have heard motions put in committee to reduce the vote for the annual drill of the militia from $1,500,000 to $750,000. Why, you might just as well cut that expenditure out altogether. If you are going to have a militia you will have to drill it, otherwise you had better not have a force at all. The actual figures required this year for the training of militia units, the volunteers, was $2,700,000, but we cut the figures down to li millions. This sum will only allow us to drill eighty per cent of the militia units at sixty-five per cent of their strength, allow them only six days' annual training instead of, as formerly, twelve days. That is a very substantial cut. If you go below that amount you might as well wipe the expenditure out altogether. I express the earnest hope that next year sufficient money may be voted by the House to enable all the militia units in Canada to perform their annual training at full strength and for full time. It will require at least $1,200,000 additional to do this, but it will be money well spent by the country. Another hon. member criticised the amount asked for in the Estimates for the permanent force, and moved to reduce the vote by $2,000,000. The Permanent Force is at rock bottom at the present moment, and every dollar in the Estimates is absolutely necessary to maintain this small force. We will not come out even this year unless we suffer from a few desertions this summer as we usually do at that season, so close have we cut those figures. I think there was one other item in the Estimates against which a motion was made this session. It was to cut out the pay and allowances to officers-the little allowance which the commanding officer of a unit has for the purpose of paying the incidental expenses of the unit, the little outgoings that otherwise he has to pay out of his own pocket. Does the House 2081
not know that the band of loyal men who command our militia units give their time practically for nothing, that every man of them is a loser from the financial point of view, to say nothing of the loss of time. The money they draw does not as a rule come to them, it is funded for the purposes of the regiment. The expenses in far too many cases have to come out of the pocket of the commanding officer. There is absolutely no financial gain for any man in the militia. It is loyal, patriotic work on the part of the men who command these unfts, and I would be sorry indeed that the day should come when this House should cut out these trifling allowances to men who so freely give their services, their time and their money.
May I make just one more reference to the attitude of my hon. friend for Shelburne and Queen's and also to the attitude of my hon. friend the official leader of the Opposition in regard to the Militia of Canada. The former in his speech on Tuesday stated, used this language-and the passage will be found at page 3252 of Hansard:
Now come, if you will, to the question of naval and military expenditures. If anybody says that in this country we have no need of any naval or military expenditures-once in a while I hear some suggestion of the kind-I do not wish to be included among the list of people who entertain such views. A self-resepcting country must have a small standing army, a nucleus that would be available when an emergency arises, and it must have, in a moderate degree, even some naval organization.
But this is the part to which I wish to draw particular attention:
But, I do humbly submit, this Is not the time for these things. My hon. friend the member for Quebec South (Mr. Power), himself a gallant returned soldier, the other day reminded us of an important fact. We have 400,000 trained soldiers in Canada to-day-the best material for fighting that the world has ever produced. These men can be called upon if any emergency arises. Why we should anticipate any emergency at this time is not easy for anybody to conjecture. If there ever was a time when we had need of but little military expenditure it is to-day, and I believe the men who will be most ready to confirm that view will he the returned soldiers themselves. They have had all the war they want-
Mark those words:
-they want a chance to get hack to the arts of peace. And so I say that the military expenditure might well have been curtailed in the present year in larger measure than has been attempted by my hon. friends opposite.
My hon. friend the member for South Quebec during the passing of the Militia Estimates made an exactly similar state-

merit. Last year when the Militia Estimates were under discussion my hon. friend the official leader of the Opposition made another very similar statement, which will he found at (page 13675 of Hansard:
I would point out that we have in this county at the present time an army of experienced men who need no drilling, men who have been through the war and have suffered its hardships. No amount of drilling in the world will make them more efficient than they are to-day, and until we are through with the work of demobilization we can well afford to dispense altogether with annual drills.
What do these statements mean, Mr. Speaker? They mean simply this, that we have in Canada at this moment about
400,000	of the most highly trained soldiers that the world has ever seen, men who have gone through the worst grilling in battle that the world has ever known. They have bared their breasts to the shot and shell of the enemy, they have taken their chances, they have done much to secure us who stayed at home in our lives, our homes and our liberties. And the message to those brave lads from the leader of the Opposition, from his chief lieutenant who sits beside him, and from the hon. member for South Quebec means, if it means anything: We will be so penurious and so miserly that we will not spend any further money for military training, but if trouble comes in the future we will call again on those brave souls to protect us. Surely, in the name of God, these men have earned some measure of relief, surely under high heaven one may honestly declare that these men have done their bit, their full bit, and are entitled to rest and to immunity while others are in training to take their places. I want every returned soldier-
Mr. MACKENZIE KING (rising) -


Hugh Guthrie: I will not be interrupted for the moment. I want every returned soldier to know the attitude of hon. gentlemen opposite upon this question. To my mind it is the most unjust, the most unreasonable and the most ungrateful attitude that could be assumed by any body of men in this or any other country in regard to those gallant men who served their country during those long and awful years of war.
Now, Mr. Speaker, we are told, on the other hand, that there will be no more war, and the cry is/in some quarters: Wipe out all military expenditure. That cry is popular, very popular among some elements in this and every other country. It is particularly pleasant to the ear of the BolshefMr. Guthrie.]
vist, to the ear of the Red and to the crowd which gathers around the soap-box orator at the street corners in our big cities. They like it, they talk it, they write it in their newspapers. Cut out all military expenditure, is their demand. We reply: No. Reduce the military expenditure to the line of safety and do not go below that line. We have reduced far below the pre-war basis

it was pretty high the year before the war, $11,000,000 and over-we have come back to the same basis we had in 1905, 1906 and 1907. We have adopted the recommendation or rather the suggestion, of the Brussels Conference, and we have carried it into effect to a greater extent than has any other country in the civilized world. I know there are those who believe that the millennium is at hand. I know there are those who believe the League of Nations is going to solve all the difficulties of this world. God grant that it may be so. If the League of Nations shall succeed in maintaining peace among the nations of the world, if it shall succeed in removing from the minds of men the fear of war, and the burden of war from the backs of weary multitudes, it will have accomplished the greatest thing which has transpired in this world since Christ was born in Bethlehem. Let it go on with its good work and it will have our God speed. Let it prosper. But I am inclined to think that the better judgment in this country and throughout the world at this moment is that the time has not yet come when "men will beat their swords into ploughshares and their spears into pruning hooks," and until that day does come we, as trustees of the people and of this country, have this clear duty imposed on us, which we have always carried out in the past and will carry it out in the future-the duty of maintaining a sufficient military and naval defensive force to preserve law and order within our own boundaries, to preserve the life and property and homes of our own people, and to keep the shores of this beloved country inviolate, no matter who shall be the aggressor.


Mr. D. D. McKENZIE (Cape Breton North and Victoria) :: Mr. Speaker, I propose to speak on the subject of the Budget, I must say at once .that I do not pose as a military critic, nor did I have any expectation that we were going to fight the war over again, and that all the breeze' and enthusiasm and eloquence which during the war served their purpose for the Government were to be rehashed and revamped

this afternoon by the Minister of Militia (Mr. Guthrie). Let me assure the minister that if there is any patriotic assistance necessary for any soldiers in this country, the Opposition is just as anxious as he is to meet their views and their just demands. Can anything be more ridiculous, Mr. Speaker, than the idea that this vote of eleven odd millions which is in the Estimates for the purposes of militia is going to be a godsend to the wives and children and homes of the soldiers of this country? It is not the intention of the vote; such an end cannot possibly be accomplished by it. Now, what judgment are we to pass upon the speech of the hon. Minister of Militia? It is not necessary for the purposes of the militia vote; it has nothing to do with it. It is simply an attempt to throw, dust into the eyes of the returned soldiers and make them believe that the Government is in the right while the hon. member for Shelburne and Queen's and the leader of the Opposition are proceeding in the opposite direction. But nothing of the kind has happened so far as hon. members on this side are concerned as regards assistance to the returned soldier. Let hon. gentlemen opposite read the resolutions that are being sent to them from time to time by returned soldiers, resolutions that are being passed by associations of war veterans all over the country. The last resolution of that kind was passed, I think, by the veterans' organization for the whole of Canada, met in conference in some central city-a resolution calling upon the Government to resign and to let competent men administer the country's affairs. I suppose this strong speech this afternoon is for the purpose of telling the returned soldiers who are passing these resolutions that there is still some kick in the old horse and that something is going to be done.
I do not propose to follow the enthusiastic eloquence of the hon. minister. But could anything be more absurd than for sane men, men who are of age, to be sitting in this House on this beautiful May afternoon discussing expenditures upon war material and war operations in Canada as compared with those of the republics of South America, for instance? Could anything be more ridiculous? We are not an independent nation. We are not defending ourselves against the outside world. Is the Prime Minister or the Minister of Militia prepared to say that we are going to start an expenditure in this country for the purpose of defending ourselves against
our neighbours to the south? Will nine millions of people arm themselves to protect their country against 110,000,000 or 120,000,000 people? Is that what we are called upon to do? Nobody would think for one moment of such a thing. Does the Prime Minister or the Minister of Militia think that the fact that we live alongside a splendid, civilized, God-fearing, law-abiding nation counts for nothing at all? Must me make the same expenditure on armaments, take the same steps for the purpose of protecting our homes, as if we lived down among the Hottentots, in the wilds of South Africa? If that is the theory that is put forward by the Minister of Militia, I assure him that the sound, sensible people of Canada think differently. They are going to take advantage of the fact that they live alongside the class of people that I have just described. We have lived in peace alongside the United States for more than a hundred years, and we want to continue that situation. We do not want to start any trouble between ourselves and our friends across the line or elsewhere by showing that we are spending millions every year upon armaments. Will any member of the Government say that our military expenditures and our military preparations are anything but supplemental to those of the Mother Country and the other dominions? That is the attitude which wie have always taken; that is the attitude which we take to-day. When the Mother Country is in danger, when she declares war, we are with her, just as Australia, New Zealand and South Africa and all parts of this great Empire are with her. It is not my understanding of the sentiments of the people of this country that we are to keep up an army and a navy so far as that will make us an independent nation and enable us to fight against our neighbour to the south of us -if such a ridiculous and absurd condition could possibly be conceived. Sir, when the people of this country look for cheaper food, cheaper clothing, cheaper supplies for the maintenance of their families; when they crave for work to enable them to earn the moneys that they require, the Minister of Militia tells them: "We have nothing to offer to you; we have xio public works for you; the factories are closed. You who have no bread for your children; you who need clothing for the members of your families; you who cannot sleep at night because of the troubles which beset you-you must bear

in mind that the percentage of the cost of armaments to revenue in Canada is less than it is in Brazil. That is what you may feed your children with; that is the consolation the Government has to give you." Sir, it is not necessary to argue that the people of Canada to-day are thinking more of the necessities of life than they are of military matters. I do not think I should occupy any further time in following up these comparisons. Our idea is to get clear of expenditures of this kind so far as we possibly can. Only a few days -ago the ex-Prime Minister, the right hon. member for King's (Sir Robert Borden) delivered an address in this House on constitutional law and constitutional history, on the relations which should exist between one country and another, and on some of the effects of war. And what did he say? He rebuked the Government by saying that the aim should be to drop all appearances of keeping up a military force in this country; that we should come back to peace and harmony and- brotherhood. That, I imagine, should be a sufficient answer to the Government for the policy which they are pursuing in military matters. The right hon. member for King's was in charge of the country's affairs during the war and was familiar with all its phases and all the relations which it brought about as between nations-more familiar with them, perhaps, than either the present Prime Minister or the Minister of Militia. We on this side may not always be willing to follow the right hon. member for King's, but I think this is one case in which the people are quite willing to accept his advice. Let us live as peaceably as we can; let us make as little military expenditure as we can; let us get back as quickly as possible to the happy times of pre-war days. Why did thousands of our boys lay down their lives upon the battlefields of France and Flanders if not to establish peace and harmony in this country and forever to down the dragon of war?
If we are to keep up this warlike spirit after the war is over, if no fruit is to be obtained as a result of those sacrifices, we have, to my mind, largely in vain sacrificed the lives of our boys. Nobody need preach to me any higher ideals of our soldiers than I have; and if the day comes, if ever it comes, when it is necessary for this House to give proper recognition to the way in which it appreciates and values the services of those men, I am sure hon. gentlemen on
[Mr. McKenzie. 1
this side will not be found lacking in expressing in a tangible way the manner in which they understand their responsibilities and duties in that regard. I do not take kindly to the lecture which was handed out to us this afternoon by the Minister of Militia and Defence (Mr. Guthrie), as if it was necessary to preach a gospel of that kind to hon. gentlemen who sit on this side of the House.
Leaving the military business at that, I wish to refer briefly to the first part of the speech of the minister in connection with the Budget. He pointed out the same old fallacy, which has been preached to us for the last number of years, that the Government has a surplus. Can anything be more absurd than to say that we have a deficit of nearly $200,000,000, and at the same time to tell us that we have a surplus? I do not know, nor can I understand, where that surplus comes from. On the face of the figures, which are as plain as they can be, we have a deficit of nearly $200,000,000, but at the same time we are told iby the Minister of Militia that we have a surplus.


Mr. MEIGHEN:: Perhaps the hon. member would take the figures of total revenue and total expenditure and just subtract one from the other, and see how his arithmetic is improving.


Daniel Duncan McKenzie: There is a statement
of that kind which I will come to in a moment.


Arthur Meighen: But the hon. member
does not do so.


Daniel Duncan McKenzie: I claim the same
right as a private member of this House that ministers of the Crown claim.


Arthur Meighen: All right.


Daniel Duncan McKenzie: While I am speaking,
I have the same rights as they. The Minister of Militia and Defence scouted the idea of anybody interfering with him; I claim the same right even of the Prime Minister. I am long enough in this House to know what my rights are and I am going to insist upon them.


Some hon. MEMBERS:: Oh, oh.


Daniel Duncan McKenzie: If I can amuse or entertain hon. gentlemen opposite, that does not cost me anything and they are welcome to any amusement they can get out of my remarks.
What I was going to say, Mr. Speaker, is this, that you gave a ruling this after-

noon, that anything which was given as imaginary should not be entered upon the revised edition of Hansard. I would suggest that when you come to deal with today's Hansard, you issue instructions that the speech of the Minister of Militia and Defence, so far as it has reference to this surplus, shall not he entered upon the revised Hansard, because it is certainly of the most imaginary character.
The hon. gentleman speaks about the ordinary expenditure and the ordinary revenue, but he does not tell us what the ordinary revenue is, nor what the ordinary expenditure ,is. The ordinary revenues of this country are revenues similar to those which were collected before the war, before extraordinary taxes were imposed upon the people of Canada. If you are going to compare ordinary expenditure with ordinary revenue, you have to deal with the ordinary revenue and the ordinary expenditure of this country as we understand such revenues and expenditures. What are the extraordinary revenues that we have collected since the war? According to the figures given by the Minister of Finance, we have a right to say that one-third of the revenue collected by the Post Office Department is extraordinary, because the tax of two cents on a letter was raised to three cents. Therefore, about $9,000,000 of extraordinary revenue was collected in that way. I will give the figures from Hansard itself so that there will be no possibility of mistake about the matter. The Minister of Finance (Sir Henry Drayton) in his speech the other day, gave the different classes of revenue. He said that the revenue of the Post Office Department was $26,000,000. I claim that one-third of that was extraordinary revenue. The amount of $40,000,000 was collected under the business profits war tax, an entirely new tax. The amount of $46,500,000 was collected under the income tax, an entirely new tax. The amount of $79,050,000 was collected under the Inland Revenue war tax, an absolutely new tax. Other war taxes amounted to $2,-
355,000.	These extraordinary taxes amounted altogether to $176,905,000. If the Minister of Finance or the Minister of Militia will deduct that amount of $176,-
905,000	from the ordinary revenue of the country, and then compare ordinary revenue with ordinary expenditure, there is some justification in the comparison; but if he leaves that amount in the ordinary revenue and makes the comparison in that way, it is not a fair comparison. There might be some justification if the comparison were
used for the first time; but it has been used several times during the war; the same criticism was made, and still they keep talking as if moneys collected in this way comprise merely ordinary collections and they had a right to use such moneys as the ordinary revenues of the country.
I do not propose to follow the speech of the Minister of Militia and Defence any further. I wish to dismiss it by saying, for the reasons that I have stated, that he has not dealt at all fairly with the question whether there is a surplus or not, and the question, on which he spent a whole afternoon, trying to show us that this country is not spending on war as much as some of the smaller republics and small countries in the world which are absolutely independent nations and must defend themselves against other nations that are ready and apt to make war upon them at any minute, is not such a matter as should engage the time of this House for a single minute.
Coming down to the Minister of Finance (Sir Henry Drayton) and the presentment of the case which he has made to the House, I can only say that as sane, fair people would approach a question of this kind' according to the facts as they present themselves, so would I approach the discussion of this question. I do not for one minute presume that anything which I can say will add to the most illuminating speeches that have been made by hon. gentlemen from this side of the House. The speeches made by the hon. member for Shelburne and Queen's (Mr. Fielding), by the hon. member for Red Deer (Mr. Clark), and by my desk mate, the hon. member for Maisonneuve (Mr. Lemieux), are of the most illuminating and noteworthy character, and if it was merely a case of resting upon a clear-cut answer to the speech made by the hon. Minister of Finance, it would not be necessary for this side of the House to say very much more, if indeed anything more upon'the subject.
It was also most noticeable that the speeches made on the other side of the House came from Liberals, or Liberal proselytes, if you choose. There does not seem to be anybody left at all of the Old Guard who knows anything whatever about questions of this kind. I see I have stirred up my good friend from Regina (Mr. Cowan). He is not at all prepared to take a back seat; he is not willing to admit that all the learning and all the knowledge and all the capacity necessary to discuss public questions rests with the Jews

who have gone across over there from this side of the House. He believes that among the Gentiles also there are men who know something about public questions. We also had a very excellent speech from a onetime strong Liberal, the Minister of Marine and Fisheries (Mr. Ballantyne). He still tries to keep some shred, perhaps only a smell, of the garment of Liberalism around him whenever he makes his speeches.


Arthur Meighen: He has had the garment fumigated.


Daniel Duncan McKenzie: I am sure that fumigation would be required for anybody to live on the other side of the House. I was simply referring in the most complimentary way to the speeches of my hon. friend.
Then what did we have in the speech that we have just listened to from my hon. friend the Minister of Militia (Mr. Guthrie) ? As I heard him speak, I was trying to figure out whether we were listening to Saul of Tarsus or Paul the Apostle. The transition was very striking indeed. I could not help thinking as the Minister of Marine and Fisheries was making his speech that his friend who was sitting alongside of him, the Minister without portfolio, the hon. member for Yarmouth (Mr. Spinney), was very uncomfortable. I was looking at him from my position of vantage here, and I could see that while the Minister of Marine was pounding his desk, emphasizing his high-as-Haman's-gallows protection, my good friend from Yarmouth was doing a lot of thinking about a speech of his last year. When the tariff walls were being raised higher and higher, and hon. gentlemen opposite were pounding their desks the harder, the higher the walls of high protection were to be raised in this country, I could not help thinking of what my hon. friend from Yarmouth said last year: I
I can only say that I regret that at this stage my hon. friend found it necessary to introduce this 'amendment which comes at a very inopportune time. It has for its purpose, as I assume, the downfall of the Union Government, or their return to the country to get a fresh mandate from the people. I must point out this fact, that since they have been in power I have followed them as a free trade, or rather as a revenue tariff liberal. I am that to-day, but I do not believe that any tariff for other than revenue purposes could be satisfactorily dealt with in this country at the present time
That is the gospiel of my good friend from Yarmouth-revenue tariff or free trade, if you please. I would say to him that it was time indeed when he heard that strong, loud speech from the Minister 
of Marine and Fisheries, which left no doubt at all as to the attitude of the Government, to take up his bed and walk, and say to the Prime Minister and the Minister of Trade and Commerce as he passed out of the door: "Fare thee well, and if forever, then forever, fare thee well,"-because there appears to he nothing in common between the views, or the protestations at least, of the hon. minister without portfolio and the statements of the rest of the Cabinet. I presume that, like most other things, he will disappear and the place that knew will will know him no more forever. I think it can be said that as far as representing the fair county of Yarmouth is concerned, he has finished his work. There may be a crown for him somewhere, but not in the county of Yarmouth.
I have referred to the speeches on the other side of the House from men who were formerly on this sid^. I am proud of those speeches. It is some satisfaction to know that the men who have gone away from here, but without whom we can get along so splendidly, because we have such excellent talent on this side of the House- surplus as they were with us, and easily as we could spare them, the other side of the House must needs seize them and put them in the very forefront, as evidently they have nobody else to put up. That is some satisfaction to us on this side of the House, and that is the reason I have alluded to those speeches. I had forgotten to mention in this connection my good friend from North Oxford (Mr. Nesbitt). No man deserves better at the hands of this side of the House to-day than my hon. friend, for the very scathing criticism that he handed out to the Government yesterday. Of course, I did not receive that criticism with any very great acclaim, because I know my hon. friend from North Oxford so well. There is some nigger in the fence; th,ere was something in that speech of his last night by which he is to advantage himself. I have not been able to discover just what it was, but before the general election is over it will be very clear on every barnside in the county of North Oxford just what his purpose was. However, speaking for myself, we expect to get along to some extent with the assistance he gave us last night, but let me assure him that we are not at all deceived as to the real genuine purpose of that speech, and the real spirit of it will come to the fore before many months.


Mr. NESBITT:: Tell us what you think the purpose was?	,


Daniel Duncan McKenzie: I told my hon. friend that I had not reached a conclusion. There are so many things it might be. But there were so many barn doors to it that it would be difficult to reach any clear conclusion as to what it meant. However, of one thing I am perfectly clear, and that is that it is not all intended for us; that is one sure thing.
As I was saying, Sir, if the minister's statement were that of a business concern, it would not be found very satisfactory. The financial condition of any institution is the best index to its strength and stability, and the condition of this country at present is not satisfactory, financially or otherwise, if we are to judge by the figures presented by the minister. I do not think it can be said that Canada, financially speaking, is in a very healthy condition. The minister tells us that for the ensuing year, the revenue will be $432,000,000; blit the prospective expenditure-not the $500,000,000 which has been spoken of-is $613,000,000. In other words, there is a deficit, according to my subtraction, of $181,000,000. Per capita, this is $21, and for a family of, say, six, it represents a burden of $126. The national debt has increased from $350,000,000 to $2,350,236,700, an advance of $2,000,236,700. This shows an increase per annum, during the ten years my hon. friends have been in power, of $200,023,670, or a per capita debt of about $260, which, for a family of six, means $1,560. Now, the per capita tax in 1911, the year the Liberal party gave up the reins of power, was about $43, or, for a family of six, $258. At the present time it is $1,560, showing an alarming increase. That in itself speaks volumes for what is being done in the country to-day as compared with the record of our day, and the result is altogether attributable to the difference in policy between the two parties.
In the House a few minutes ago I saw my good friend from Queen's, Prince Edward Island (Mr. Nicholson). It will be remembered that he declared In this House some years ago-I think, indeed, the first year he was in the House-after associating for a while with hon. gentlemen on the other side, and conversing with them, that the policy of the Tory party was to dash away and spend the money; and he is a good business man who has a knowledge of financial matters. Now, following out that programme, hon. gentlemen have certainly spent the people's money to such an extent
that to-day there is hardly anything left with which to carry on the public affairs. The expenditure to-day is $613,000,000, as compared with an expenditure in the year 1911, the year of the election, of $87,000,000 or $88,000,000. It will be recalled that the right hon. gentleman who to-day represents the county of King's, Nova Scotia, and who was at that time leader of the Opposition, stated, either in the House, or in his manifesto, that that annual expenditure of between $87,000,000 and $88,000,000 was in itself prima facie evidence of reckless and corrupt expenditure on the part of the Liberal Government, and proof that the party then in power deserved to be turned out of office, and the charge of public affairs handed over to other people. What does the right hon. gentleman say to-day when he finds that, for practically the same purposes, apart from war expenditures, we are spending not $87,000,000, or $88,000,000, but over $600,000,000, of the people's money? If the expenditure of our day was evidence of bad management and lack of judgment, how much more condemnatory is the present scale of expenditures under this Government?
The Minister of Finance-I am sorry he is not in his place-has shown favouritism to the millionaires, the trusts, and the combines in this country, and, as usual, he has kept a heavy hand upon the poor people. Last year there was a great ado in this House in regard to the tax on luxuries. We were told that the Minister of Finance had at last awakened to the gravity of the situation, and1 was determined to tax tho^e who could afford silks, satins, and all the other luxuries that money can buy. He was going to lay a firm hand on such people and make them contribute to the taxes of the country to pay the costs of the war. There was considerable talk about this, and quite a discussion, and at last this tax was put into operation. Well, what has happened? I see the Minister of Finance in his place now and I am glad of the fact. The hon. gentleman soon caught on to the disposition of the company in which he found himself as a member of the Government; became a friend of the millionaire and of the profiteer, and now things are reversed and he lays a heavy hand upon the ordinary man, who should be helped and for whom living conditions should be made as easy as possible. While he abolished the luxury tax, the only weapon by which he could reach those who are able to travel and who can revel in luxuries, he retains the means for making things

uncomfortable for the poor man and of taking from him practically that which he has not. He allows to escape the ladies with the diamonds and sumptuous furs, the silks and the satins; he lets go the Queen of Sheba, while he chases the little boy with the twenty-five pound bag of flour under his arm. I told a former Minister of Finance in this House when a tax was put on apples that they were taxing the fruit of the poor man. That tax is in force yet. I told him when they put a tax on oil that they were taxing the light of the poor man. They put on the apple tax to please their supporters, and millionaire supporters at that, 'from the great province of British Columbia. On the occasion referred to, I told the former Minister of Finance that by what he had done he had knocked the apple out of the baby's hand and sent him to bed in the dark. Now I am telling the present Finance Minister that while he lets the Queen of Sheba go by in swell array he is having a tax collector stand on the corner, stick in hand, to knock down the poor fellow that has not paid the tax on his twenty-five pounds of flour. All these things constitute evidence that the poor man is visited with the scourge of taxation, while those who can better afford to pay such taxes are allowed to go scot free.
At Six o'clock the House took recess.
After Recess
The House resumed at Eight o'clock.


Daniel Duncan McKenzie: Mr. Speaker, when
you left the Chair at six o'clock I was pointing out the unfairness of the distribution of taxation as presented by the policy of the present Administration and as applied by 'the Minister of Finance. I was pointing out that the class of people who were supposed to be living in luxury and capable of enjoying the fruits of wealth are allowed to escape under the Budget, whereas the poorer classes are visited with taxation. I was pointing out that the man who can buy on a large scale escapes, in some places and under certain circumstancese, the taxation which falls on the poor man whose means will not permit him to buy on such a scale.
I wish to point out further, Sir, that ever since we got into war habits of expenditure this Government has always permitted the barons and profiteers of the Tory party to make millions, whereas ho like opportunity has been given to the rank and file of our people. I wish to
TMr McKenzie.1
point out now, as I pointed out before, the very serious mistake made by the then Minister of Finance (Sir Thomas White) and by his successor, the present minister, in adopting his policy, in lending money to the tune of millions of dollars, money that in a sense we did not have-borrowed money, to foreign countries without security and without very much prospect of ever getting it back. In fact, it is more in the nature of a gift than a loan. What was it given for, Mr. Speaker? There is no record in Parliament of any request having come from those foreign countries for loans. Nor is there any record, so far as any member of the Government has ever disclosed, that any proper provision was made by any of the governments of those foreign countries to furnish business-like security. And those moneys were advanced out of borrowed funds which might have been applied to much better purpose at home.
How were those moneys to be spent? One would suppose that the plenipotentiaries of those foreign countries would come here and make proper arrangements with our Minister of Finance, but there is no record of anything of the kind. As a matter of fact, those loans really were provided so that a coterie of supporters of the Government, manufacturers of Ontario and other parts of Canada, might dispose of the immense stores of material, such as clothing, harness, boots and shoes, and of foodstuffs, such as butter, cheese, flour, potatoes, pork, mutton and beef, which they had gathered up all over the country for the purposes of the war in the expectation that it would continue longer than it did. When peace suddenly came those men were simply overstocked. Those multi-millionaires, those profiteers-* and I do not use this term in any improper sense in this connection-men who during the whole course of the war were piling up millions of dollars, and who could very well bear some of the losses consequent upon peace, could very properly have been left to shift for themselves. But what happened, Sir? A commission was formed and some of the members of this House were appointed to divide these millions of dollars among our multi-millionaires who had those goods to sell. The foreign countries evidently had nothing to say about it. The commission decided among themselves how the money was to be applied for the disposal of the huge quantities of goods stored everywhere throughout the country. Those goods were sold and sent to those foreign countries, and their

owners got their money clean cut and easy -Government cheques were passed out, and they were through with the transaction. But the Minister of Finance is still looking for his principal and interest, and, so far as we on this side of the House can learn, there is nothing yet in sight.
What fault do I find with those foreign loans, Mr. Speaker? First, I find this fault, that this was not a business transaction, that we did not have the money to spare, and that we might have utilized it to much better purpose in developing our own country, and thus spending the money with the maximum of profit to our own people. Further, I find fault in that the loans have not been properly secured. But the worst feature of all is that the poor people of this country, who during the war and at the time of this transaction were paying enormously high prices for the goods they needed for their families, were denied the opportunity of participating in the advantages which would have accrued had those goods been sold here at the market prices. Instead of that, they were taxed to furnish money to enable others to buy these goods as against themselves, in other words, to compete with them in the markets of this country for goods which the people needed but could not buy by reason of the high prices which were maintained in order that these very goods might be sent to those foreign countries at our expense. I submit, Sir, that that transaction alone is enough to condemn any administration which had to do with it.
If we had not at the proper time directed the attention of hon. gentlemen opposite to these things and found fault concerning them, they might well on some subsequent occasion ask why we had not raised the question at the proper time. The records of this House, Sir, will show that I and other hon. gentlemen on this side opposed this transaction as strongly and as vigorously as we could. But the majority opposite feel that they are serving their country, serving the purposes for which they were sent here, by voting down, through the exercise of brute force, any ideas of business principles that emanate from this side. That is the treatment which was handed out to us in connection with this transaction, and it is only in line with the procedure followed by my hon. friends opposite in all matters of like importance since they took office. I point this out as one of the things which the Government have done contrary to the interests of the people, and one of the things which give evidence
of a lack of conception on the part of the Government as to how the business of the country should be handled. The people of Canada cannot be fully awake to the enormity of this political crime, the placing of one hundred millions of the people's money in the hands of a commission for the buying of goods out of storehouses in Canada which could have been sold here at a low price and to the advantage of the people, and the carrying of those goods out of the country at our expense. We do not get a cent of thi money back and the probabilities are that we never will. I repeat that this is simply in line with the policy of this Administration and with the manner in which they have carried on the business of the country.
We have on our hands the old Mackenzie and Mann railway system, the Canadian Northern. We own it; we have paid for it three or four times over, and we are running it. It is still known to the world as the system of the Canadian Northern Railway Company. When the Government want to borrow money for the running of this railway one would think that any sane Minister of Finance or Minister of Railways would regard the credit of Canada as better than the credit of the Canadian Northern Railway Company. But the Government do not proceed in this way; they borrow money in the name of this defunct and bankrupt corporation-a corporation which, while it was moving or had any life in it, never had the reputation of paying its bills, never had any proper standing in the financial world. Why should we continue to carry on business under the name and standing of that corporation? I suppose hon. gentlemen opposite will tell me that I am dreaming. Sir, I am not dreaming; that is the way this Government is carrying on business to-dav. They borrow money in the name of the Canadian Northern. No person questions the credit of this country. I may find fault with the Minister of Finance; I may find fault, and deservedly so, with the Government generally; I may find fault with the policy of hon. gentlemen who are supporting the Government, but I have not the slightest doubt of the sufficiency and the solidity of the credit of this country. If money is to be borrowed we should go into the market as a country with the reputation that we have as business people and borrow it on the strength of our own credit without playing upon the credit of a bankrupt concern such as the Mackenzie and Mann-Canadian Northern Company. I have in

my hand, Sir, a record from the other House which sets forth certain inquiries with regard to the borrowing of money by the Government for the purposes of the railway which I have mentioned. These are the questions that were asked:
1.	Has the Grand Trunk Railway or the Canadian National Railways or the Grand Trunk Pacific Railway placed any loan in the United States during the last twelve months.
2.	If so, with what firms or persons were
these placed?	.
3.	Were there any commissions paid or other disbursements of any sort in connection with these loans.
4.	If so, to whom were these commissions or other moneys paid?
5.	What were the rates of interest?
6.	What were the net proceeds of these loans?
The Hon. Sir James Lougheed answers, on the first day of March, 1921, as follows:
1. Loans have been placed In the United States during' the last twelve months by the Canadian National Railways and by the Grand Trunk Railway, as follows:
Canadian Northern Railway Company-
7 per cent equipment trust, series "E" 1920, certificates (Canadian National Rolling Stock, Ltd.), $15,000,000. Dated May 1, 1920; matures May 1, 1935. Issued through Dillon, Read & Co., New York. Net price to Railway Coy., 95. Net proceeds, $14,250,000.
In other words, the bonds or stocks, whichever they were, of this great country can only be sold at 95 when we are selling under the very inviting name and business stamp of the old Canadian Northern. The friends of the old Mackenzie and Mann concern are taking advantage of this opportunity of having another haul out of the Canadian people. Apparently, on the surface, the Government has nothing to do with the matter; it is money that is borrowed by the Canadian Northern, and the old friends of the old Canadian Northern who used to handle the business,-their solicitors, their agents, their brokers, the same people are there doing business at the old stand. The answer continues :
Expenses:
Printing, American Bank Note Co	$3,475
Signing certificates, Signature Company. 150 Expenses:
It appears that we have not enough civil servants to do this little bit of business; $150 must be paid for the mere signing of these certificates.
Then there are the following expenses:
Trustees' fees, Girard Trust Co... $ 7,567 46 Legal costs, Duane, Morris & Heckscher and J. H. Barnes, Philadelphia 5,376 39

In all, $16,568.85 for expenses, because Canada, forsooth, is borrowing $15,000,000.
[Mr. McKenzie.)
Canada, with all the machinery and all the credit of the Government, with all the banks that ought to be and that are willing to lend us money, has to spend in New York and elsewhere $16,568.85 in order to borrow $15,000,000, which, to the Canadian Government and to this country, ought to be a very small transaction. But this is the record handed out to this country by the Government itself through the leader of the Government in the Senate.
There is a second loan:
7 per cent twenty year sinking fund bonds, guaranteed by the Dominion Government, $25,000,000. Dated December 1,	1920; matures
December 1, 1940. Issued through Dillon, Read & Co., New York. Price to Railway Co., 96.20.
Then again is displayed to the world how strong a country we are when we do business in another person's name. You will sometimes find a defunct man, a bankrupt, who is no good, who cannot get his head above water, doing business in his wife's name. The Canadian people seem to be unable to do business in their own name and must do business through this old wife, the Mackenzie and Mann concern. Here they are with a credit of $96.20 on $100 they ought to be selling their securities at a premium. What is the result of this $25,000,000 loan? This netted to us, not to Mackenzie and Mann-they did not care what it brought; we must face the music and pay the piper-$24,050,000. No accounts have yet been rendered for expenses. Then there is another loan:
Grand Trunk Railway-
$25,000,000 twenty-year 7 per cent Sinking Fund Gold Debenture Bonds, at 94J net, including commission and cost of distribution.
$25,000,000 at 94|	 23,625,000 00
Less expenses	 29,794 69
$23,59^,205 31
Expenses:
Cadwalader, Wiskersham % Taft,
New York	$15,166	69
Larkin, Rathbone & Perry. New
York	
504	55Mr. Miller Lash, Toronto	
5,000	00It seems to me that we have heard the name "Lash" before in connection with unprofitable transactions for the Canadian people:	,
The Evening Post Job Printing office,
New York	$	708 45British American Bank Note Company, Ottawa	
8,415	00

Then there is another loan to the same company:
$12,000,000 fifteen-year 6J per cent Equipment Trust Certificates, on Philadelphia plan, price 91.65.

Of course, the longer we continue to do business in our wife's name, the worse our credit gets. It is now down to $91.65 on the $100. The expenses are not given; the bills are not sent in; but we must suppose that they will be, at all events, proportionately the same expenses as in the other case. I work it out roughly that our expenses in this connection are nearly $57,000. If that is a sample of the way in which the finances of this country are looked after, it is loud notice to the people of Canada that we cannot any longer leave our business in the hands of the present firm, that is, this Government, and that we must serve notice upon our esteemed friend the Minister of Finance (Sir Henry Drayton) that we will give him three months' notice; that he must look for a job somewhere else and find somebody else who is doing business in his wife's name, as we propose to do business in our own name henceforward.
I happened to notice some loans going through in the province of Nova Scotia just about the same time that those loans are reported to have gone through in connection with the Government of Canada at Ottawa. One would suppose that the credit of the whole of Canada should be very much better than the credit of the little province of Nova Scotia, but such is not the case. I hold in my hand a letter from the Deputy Provincial- Secretary of Nova Scotia under date of Halifax, March 12, 1921. I saw in the newspapers something about their loans; I did not know exactly how they worked out, and I wrote to the Deputy Provincial Secretary to ask him how their loans sold. He tells me that there is one loan, $2,500,000, five-year, 6 per cent, which sold a premium of $1.19; that is, it sold at $101.19 per $100, whereas we are selling at $91.65 up to $96.20, which seems to be the best we can get. On the 5th November, 1920, the province of Nova Scotia sold bonds for another $2,000,000, a ten-year, 6 per cent loan, at $102.02; That is business. On the one hand you have the little province of Nova Scotia with a population of only
500,000	people or thereabouts handling its provincial business, and on the other you have the Dominion of Canada with its great wealth. The people of Nova Scotia go into the open money market of the world, the city of New York or elsewhere and they present the securities of that little province. The Canadian people, doing business in their wife's name, present the security of the big people of Canada and
the wealth of this nation. The monied people in New York will buy the little bond of the province of Nova Scotia at $102.02 in the one case and at $101.19 in the other. Our brilliant friend, the Minister of Finance, goes down to New York with his hat in his hand. Of course, he has to tell the monied men there at once, for he is an honest man and he would not deceive them, that he is a bankrupt himself, but that his wife is all right and he is doing business in his wife's name. He presents his security. They say: "We do not like that kind of business; we do not need to do business with a bankrupt, a man who has failed and who must do business in somebody else's name. If we take your bond at all, Mr. Minister of Finance, it will be with a big slice off it. If you care to accept $91.65 for your bond, we will buy it. We are not anxious for the business at [DOT] all." They told him "you must take Canadian funds; we will not give you good American money for it," and the Minister of Finance had to say: "I have been hawking these bonds all over from Dan to Beersheba, and I must sell them somewhere. Take them; it is the best I can do."


Sir HENRY DRAYTON:: Does my hon. friend say that it is a fact that the payment was in Canadian funds?


Daniel Duncan McKenzie: I want to be absolutely honest with the minister. Somebody suggested that to me. It is bad enough for my purposes, whichever way it is.


Henry Lumley Drayton: There is a good deal of difference between American funds and Canadian funds. Is the hon. gentleman quite sure that the quotations he makes as to New York loans ate not, in the one case, in American funds, and in the other case, in Canadian funds?


Daniel Duncan McKenzie: I' am not at all particular as to the difference. I have the answers given by the colleague of my hon. friend, the leader of the Government in the Senate, and I regard those answers as sufficiently condemnatory of this Government as they stand, putting the very best possible construction upon them. If the Minister of Finance does not know the facts himself, his colleague will tell him.


Henry Lumley Drayton: If that is in the shape of a question, I do know. On the one hand, we have the American funds, the figures used here; on the other hand, the quotations as to Nova Scotia are in

Canadian funds. There is a difference of 15 points between them.


Daniel Duncan McKenzie: As I said before, I am not going to do any cheese-paring with the minister. I say it is absolutely bad financing. It is a scandal on the credit of Canada, that with all our resources we should have to sell our securities at $91.25.


Henry Lumley Drayton: Does my hon. friend know that at these figures the credit of Canada stood higher than that of any other country in the world in the New York market?


Daniel Duncan McKenzie: All I have to say is that the comparison is sufficient to bring out the negligent manner in which the business of this country is handled. Here we have a Canadian Government bond at ' 7 per cent, selling for $91.25, while the 6 per cent bond of the little province down by the sea sells at $102.02. That is my answer to the Minister of Finance, and I do not think there is any explanation that he can give that will restore his standing as a financier, and that will put the credit of this country, at all events in connection with this transaction, upon the high footing which it should have, and which we should always endeavour to maintain.
As I said before, I say again now, that the business of the country is badly handled; there are shortcomings and shortsightedness on every hand in the management of the country's business, but the most glaring piece of negligence and of want of judgment is in doing business in the name of this defunct and bankrupt concern. The people of Canada have too high a reputation and credit in the world to hide under the cover of a bankrupt institution of this kind. Does the Minister of Finance think that we do not suffer when we do business in the name of a concern that has no reputation in the financial world? For my part I cannot see the necessity or the wisdom or desirability of continuing to do business in this way, when we have our own name and our own reputation as a country to go upon, and when we have all the responsibilities in connection with this concern. Why not come out from under cover like a man and do business straightforwardly in the name of the Government, for the Government, and with the Government's money, depending on the people's credit and giving the advantage to the people of this country? I do sincerely trust that never again will any Senator or any member of this or any other House be obliged, when he has to tell

the truth, to record a transaction of that kind in connection with the financial business of this country. I think that in connection with the Budget and the handling of the business affairs of this country, it is the duty of an Opposition member like myself, particularly when I have the record from the mouths of the Government themselves, to point out to this House and to the country the nature and character of these transactions, to warn the Government and the country, and to express the hope that the Government will profit by being told what they should be told, how badly they compare with other institutions of much less strength than themselves in the same country, and under the same flag.
I pass from this borrowing episode to say a word or two, now that railway matters have been brought up, upon our connection with the Canadian Northern. I do not hold the Minister of Finance individually responsible for the transactions as a result ol which we became burdened with the Cana dian Northern Railway, but I do hold the Government of which he is a member, and himself as a member of that Government, responsible for the ill-advised, arbitrary and injudicious manner in which they have plunged this country into an abyss of debt in connection with this railway. I tell him and hon. gentlemen opposite who were here at that time, and who know all about it, that we on this side of the House protested with all our vigour and brought forward all the arguments that could be adduced against taking over this road and burdening the country with that debt; but we were laughed at. Hon. gentlemen on the benches opposite thought it was great sport to see us voted down by the force of numbers on the other side, and with glee, as if they were doing something grand for the Canadian people, they grasped to their hearts this awful holocaust which was forced upon them by Mackenzie and Mann, and their associates. The people of Canada have got this railway now and there is not such a laugh over it as there was at the time it was taken over, whetn hon. gentlemen opposite were in such a gleeful mood over the fact that they were voting down the Liberals. This nightmare is now upon the shoulders of the people of this country. They told us at the time that the road re- quired a complement, that the Canadian Northern was not paying, that the Grand Trunk Pacific was not paying, that the Transcontinental was not paying, and that they could not pay until they found an abundant avenue of strength and wealth

in the shape of the Grand Trunk Railway, which they were going to splice on to these other roads. In the expiring days of a second session in the year 1919 this road was also forced upon us. We thought that probably we were mistaken and that possibly some profit might accrue from the taking over of these roads. But what do we find to-day? Instead of a profit, the loss is greater on the other roads, and we have a deficit of $25,000,000 in connection with this bonanza which was going to put us on our feet. Is that good business? Is it any credit to the Government or those supporting the Government? The Government, heedless of reason or argument, forced the thing upon the House and upon the country and now the Canadian people must make the best of a bad situation. .	[DOT]
We have poured out money like water in Canada to open up avenues at Montreal, Quebec, Halifax, St. John, and elsewhere to provide eastern outlets to the Atlantic for the wealth of the country, so that we might increase our own business. I do not begrude the money that has been spent in that way. We have deeped the river St. Lawrence, provided facilities at Halifax, Montreal, and St. John, and altogether we have spent large sums of money for the purpose of doing business on our own ground. Sane people would urge that we direct the traffic of the country to these avenues, via the river St. Lawrence in the summer, and, when that river is closed, through the other ports that have been equipped for the purpose. According to the first figures given, we have spent $35,000,000 to fix up the terminals at Halifax, and probably double that expenditure at the harbour of St. John, on which we have expended large sums from time to time. All this money, Mr. Speaker, we are practically throwing to the winds, and we are buying an outlet for our Canadian produce at Portland in a foreign country. Is there anything more unsound than that? What are we going to do with that terminal? No one on the other side has yet admitted that we are going to do business at Portland. Hon. gentlemen try to escape responsibility in the matter, but if they are not going to do business at Portland, what are the terminals for? Why are we about to pay money for this outlet if it is not to be utilized? Are we going to close it and let the money go to waste? The idea of buying a road to Portland is entirely opposed to every sound business principle from the standpoint of true Canadianism,
and I charge the Government with having wasted the money of this country. After having expended large sums on the river St. Lawrence, and at Halifax, St. John, and elsewhere, these expenditures will have been utterly futile if we are to switch our business off to some foreign port.
I submit, Mr. Speaker, that our railway business is poorly managed; we are losing money every day and the prospects are becoming increasingly worse. I am advised that, so far as western traffic is concerned, our railways are a laughing stock and a discredit to the Government and those responsible for their management. I was informed to-day by a responsible western man that nobody bothers with the Canadian National Railways, because they do not handle business properly and cannot be relied upon. People cannot afford to do business with them and consequently traffic is passing into the hands of the Canadian Pacific Railway, who manage their affairs properly and in an up-to-date manner. This, Sir, is not gossip; it came to me just this afternoon from a responsible public man of the West who declared that, as a good business man, he had to give up doing business with the Canadian National Railways because he could not wait for them, and they had no system in their management. He was obliged to go where he could get business properly handled. This seems to me to be conclusive evidence that government-owned railways are not capable of competing with privately-owned roads; and if we want proper enterprise in this country, if we want to have our business well attended to, We must have proper regulations and restrictions in our management of the railways, and must see that no advantage is taken of the people. Private enterprise and private ambition and foresight are, after all, the best guarantees of proper management. There is nothing about the western government management but slipshod indifference; we have only half dead, half alive men who have neither the ambition nor the desire to secure business and promote the welfare of the concern for which they are responsible. They have not the some enterprise, initiative and interest in the business as private owners and managers would have, ahd consequently they fail to get the prize whan it is in sight.
That is all I intended to say in regard to the borrowing of the Government, and the' way in which they are handling the railway business. There is a great desire on the part of the Government to draw us into an open fight in connection with the

tariff, questions of policy, and that sort of thing. Let me assure the Minister of Finance, that there are greater things before the minds of the Canadian people today than the question as to whether the tariff is high or low. When the people consider the fact that the country is being ruined by mismanagement on the part of the Government, when they come to talk about the building of ships, and the continuance of the insane policy of literally throwing money into the sea, their nerves are strung more highly, and their passions are more strongly roused, than they can be by any question as to whether we have an old tariff or a new. We have not had in Canada any great upheaval in connection with the tariff since the year 1878. There have been changes up and down, but whichever Government has been in power, there has been no startling upheaval one way or the other; and I suppose that, whichever party comes into power after the next election, the necessities of the people and the vested rights of interest, will have to be considered carefully, judiciously and wisely, as they have been in the past. I say, Sir, that the people of this country are not so much concerned about the battle of the tariff as the Minister of Finance and his Government may think. But they are greatly concerned about other things.
We were told last night that the superintendent of shipping for the Canadian Pacific Railway, Mr. Bosworth, delivered an address at Vancouver the other day, in the course of which he said that they can buy first-class ships, built last year, at the rate of $50 per ton. Now I take it for granted that the 'superintendent of shipping for the Canadian Pacific Railway knows what he is talking about. He is a business man, he is in the public eye, the glare of public opinion is upon him as well as upon every other high official in the service of that institution-I take it that he would not assume the responsibility of saying that he could buy ships at $50 a ton if that were not the case. However, the statement was made in this chamber last night and nobody seems to have taken exception to it. If that is the case, Mr. Speaker, what is happening here? Under the force of closure this session the Minister of Marine, and the Government behind him, forced through the House a vote of $20,000,000 to be used in the building of ships at the price of $191.98 a dead weight ton. Those are the figures that the minister gave us in the early stages of the session. I ask again, what is happening? That practically seventy-five per cent of that money is being

lost when it is converted into ships. That is, you build a ship that is costing you practically $200 a ton and when you put it into the market, according to the statement of the authority that I have referred to, you only get $50 a ton for that ship. And here we are voting millions for the purpose of continuing such a policy. We have voted $20,000,000 to build ships at a price of practically $200 a ton for which we would only get $50 a ton if we came to sell them. Those are the things which come home to the minds, the hearts, and the purses of the people of this country, and about which they are more concerned than whether the duty will be twenty-five or thirty per cent on a pair of boots. Those are the things that impress the people of this country. Upon such issues we invite battle and will meet the Government, and we are not to be side-tracked into a fight purely on tariff lines. Our hon. friends opposite can battle among themselves to ' their hearts content; we will fight them on the tariff and on bigger things as well, and we will give the people of Canada an opportunity of passing judgment upon this Administration and the hon. gentlemen who support it. No wonder the Government is desirous of fighting simply on the tariff issue. It wants to draft its own indictment. It wants to select its own judge to preside at the trial, and to draw and empanel its own jury, so that the whole thing will be in its own hands. Let me tell you, Mr. Speaker, that the jury are now ready "to come in" as they say in the courts. In this case their verdict is "guilty" and as one says, so say they all. Now we are not going to allow the Minister of Finance to draw his own indictment- it would be defective, and bad, and should be set aside. We are not going to give him his own judge or his own jury; he must squarely face the issue before the people of this country and give a real account of "the deeds done in the body" whether they be good or whether they be evil-and evil they continuously are in this case.


Rodolphe Lemieux: Ten years in the penitentiary.


Daniel Duncan McKenzie: I would be glad to give them a ticket of leave myself. Now those are some of the things that should be discussed by the people of this country. Let me say this further on the question of the tariff, and I want the Minister of Finance to listen to me seriously. The real authors of what is regarded as the National Policy in this country were the late Sir John A.

Macdonald and the late Sir Charles Tup-per, and their speeches are still on record with respect to that policy. What did Sir John A. Macdonald say about protection? He said: It is not our idea that goods will be dearer. Our idea will be that the goods will be manufactured in our own country, and that local competition between the manufacturers in this country will keep prices at a proper level. That was the idea of Sir John A. Macdonald in connection with the so-called policy of protection. He was not a protectionist; he adopted protection for the purpose, as he thought, of forcing America into reciprocity. That was his idea, although later on he gave a little more adhesion to the principle of protection. If what was in the mind of that great statesman had panned out it would not be so bad. If the price of shoes would be just as low in Canada as in the United States, and the only ef-' feet on the tariff was to keep out the American shoe, and by competition keep down the price in this country it would not be so bad. But that is not what is happening; and I want to bring it home to the minister-and I say it on my responsibility as a member of this House-that there is no honest competition in trade in this country at all. There are combines in everything-combines in shoes, combines in rubber boots, combines in every single earthly thing you can think of from the food on the table to what you wear on your person; and no grocer in Canada to-day is permitted to sell a
9 p.m. pound of tea, a pound of candy, or a pound of butter except in accordance with the price of the combines.


Henry Lumley Drayton: I wonder if my hon. friend is aware that the Government of Ontario-in whose hands the administration of the law is-entered an indictment against a so-called grocers' combine in Ontario and that judgment in the case is reserved? I wonder too if my hon. friend could tell me whether the Government of Nova Scotia has taken similar proceedings against the combine he has been speaking about in the steel industry?


Daniel Duncan McKenzie: I am not talking about any particular combine.


Some hon. MEMBERS:: Oh, oh.


Mr. MACLEAN (York) :: Hear, hear.


Daniel Duncan McKenzie: The cackling of geese saved Rome, but I do not know whether the cackling of my hon. friends opposite will save the present Government. All I
have to say is this: I do not look to the municipal councils, or to the local governments, for the administration of the law governing matters of this kind. We have a federal law dealing with trusts and combines-but perhaps my hon. friends opposite repealed that law. [DOT]


An hon. MEMBER:: Of course, they did.


Daniel Duncan McKenzie: Well, worse and worse and more of it. We have a law dealing with combines which was passed during the reign of Sir Wilfrid Laurier. It was a good law, but I am sorry to find that it has been repealed. During the war we were told that anybody could lay information before a magistrate in the town of North Sydney against this steel trust to which reference has been made. Could anything be more absurd than to imagine that any man is going to bear the burden of carrying through the various courts a ease against a combine, with the support of all the other combines in the land behind it, and nothing on the other side but an ordinary man who found that he was charged too much for a pair of boots, a keg of nails, or something else he bought from that combine? The best legal talent of the land would be arrayed against him, and counsel's fees would be running up into so many hundreds of thousands of dollars that the poor man would be frightened out of his boots and would get in a hole as quick as he Could, thankful that he had saved his life.
I thank my good friend from York, Mr. Maclean-pardon me for mentioning his name, but I wish to show him my appreciation-for standing up in this House and stating that there should be a public prosecutor to deal with these cases. I agree with him. Until that is done and the Government have a secret service from one end of the country to the other, and the combines realize that there is power behind the prosecutor, we will have the governing of prices just to suit these combines and trusts. What can be more ridiculous, Mr. Speaker, than that in my home town a grocer cannot sell a pound of tea or butter or a keg of nails except according to schedule prices? And those prices are the same all over the country. If that grocer undertakes to sell a little cheaper he is immediately advised: "Nobody will sell to you. You can sell what you have on hand, but that is the end of you."
Unfortunately, there is no machinery to look after conditions of this kind. We



[Stage Direction]
had the late lamented Board of Commerce. Perhaps it was not as successful as it might have been, but that was because it had no sympathy or support from this Government. It was like a baby which the mother refuses to feed and keep clean; that baby would soon die. That is what happened to this baby of the Government. They would not countenance it at all; it was a sort of illegitimate child that nobody would acknowledge. What is the result? The "combinster," the profiteer, the darling of this Government, has full sway again now that this infant which he feared might grow up and usurp his power is dead. And the Government says to its darling: "Don't be concerned; we knew it would die. Now be happy and contented, for we have carried out our promise to you. We were always behind you, and we will continue to be behind you, and you will have things absolutely your own way, except of course that, for appearance sake, we must ask the attorneys general in some of the provinces to do something, but we know there is nothing they can do." I bring this charge home to the Government that we have combines in this country. And I assert that the central Government is the proper authority to look after them, and if it has not the power it should obtain the necessary power from this Parliament, and so assure the people that these combines cannot continue to oppress them with impunuty.
We heard a splendid speech from the hon. member for Dundas (Mr. Casselman) the Other night in which he claimed all the virtues for this Government-that there was nothing wrong with it and that it was entirely clear of scandal. While he was speaking I was thinking of certain procedure that we come across in the courts once in a while, when a particular class of people are being tried and the clerk of the court asks for their record. I remember one fellow who was asked, "What sort of record have you?" And he said, "Well, I don't take snuff, but you can charge me with everything else." That is about the situation of this Government. I do not know that they are very great "snuffers," but if there is any other crime in the calendar that they are not guilty of I know nothing about it. The member for Dundas claimed that there was nothing to be said against this Government. Well, the Minister of Finance was not in the House at the time, but it was while the right hon. gentleman, now member for King's, N.S. (Sir Robert Borden) was leading his Gov-

ernment that two men were read out of the House for grafting in connection with war supplies. Possibly my hon. friend never heard of it, but there are scores of members on both sides of the House who are aware that for stealing public money in connection with the purchase of remounts and of medicine for our soldiers two members from among hon. gentlemen of the other side were driven out of the House by the then Prime Minister. Yet we have members who will stand up and say1 that there is no scandal against this Government or anybody belonging to it. There is nothing that could be mentioned in connection with war supplies, such as binoculars, boots and shoes, medicine, horses, guns and munitions that were not directly or indirectly the subject of scandal by hon. gentlemen on the other side of the House; but the good innocent peace-loving gentleman from Dundas in the simplicity of his heart says that the Government is absolutely immaculate and there is nothing wrong with it. I will do him the credit for saying that the scandals I have referred to happened in 1914, 1915 and 1916 when possibly he was not a member. I have an idea that he came into this House in 1917, and therefore possibly he is innocent of any knowledge of those scandals. But he will not sin any more, I am sure, in claiming all the virtues, at all events for his friends of the old days.
Now, I think the Administration should give the people a chance to live, and see to it that combines shall be powerless to take advantage of them. I am sorry that we have only one minister present, and that therefore I cannot very well submit to him questions that do not appertain to his department, but I wish to put my case on record so that possibly the day may come when some notice will be taken of these matters. It is put up to us, Mr. Speaker, that we do not look after our part of the country, that we are not so solicitous about getting contracts from the Government for rails and coal for our national railways as we should be, and that as a result our people are suffering from the negligence of the Government or of their representatives.
I submit that there should be a fair share of national feeling in this country, and that even if our coal is to-day slightly dearer than the product of a foreign country, other things being taken into consideration, we should give our own product the preference. I do not knew that I can better express the idea I have in

mind than by reading a letter-not an imaginary one this time, but a communication which I addressed to the president of the Canadian National Railways on August 9, 1919. This letter will be found among the records of the president of the road, and that which I shall read is an exact copy. He was then refusing to buy our coal and our steel, being on the lookout all the while for lower prices. I do not blame him; he was trying to do business the best way he could, but I wanted to convince him that something more than . hard and fast business was to be taken into consideration; that regard should be had to our national undertakings and to the welfare of the men who abandoned their work in order that they might defend our country in the trenches at the front. The letter was as follows:	%
I have your recent letter and that of your assistant, Mr. Vaughan, and note the reasons given why further or increased orders cannot, in your judgment, be given to the coal mines of the counties of Cape Breton and Inverness. The reasons to me are not sufficient or satisfactory in view of the conditions which have brought about the present situation in the counties of Cape Breton and Inverness.
You will at once realize the soundness of the principle that the nation should together share the burdens, responsibilities and consequential effects and results of the recent war. That being admitted, the rest of Canada should share with the county of Cape Breton and county of Inverness the natural results of the frightful war that so recently and so successfully to the Allies has been brought to a close.
Present conditions in the counties of Cape Breton and Inverness are attributable entirely to war conditions, war demands and war necessities. In the first place, when war was declared thousands of the loyal and sturdy miners in the counties of Cape Breton and Inverness threw down their tools and 'in the shortest possible time found their way to the- trenches in France and Flanders where they valiantly fought till the very last shot was fired and the glorious victory won.
By reason of those qualified, trained and efficient miners being withdrawn from the production of coal, the output fell most materially and the companies operating the Cape Breton county and Inverness county mines could not fill the contracts into which they had entered before war was declared. Consequently they lost these customers who had to look elsewhere, across the border in many cases, for their coal supplies.
In the second place, the fleet of steamers which was in the service of the companies operating in the county of Cape Breton conveying coal to the ports of Montreal, Quebec and other ports on the St. Lawrence River and other parts of the world was commandeered by the King's authority for purposes of war, thus rendering the coal companies above mentioned absolutely helpless in carrying out their engagements for the supplying of coal where their largest contracts were made,* and where for many years the major part of their output was sold. This again caused a most serious loss of custom and rendered It necessary for those who in the past purchased Cape Breton coal to look elsewhere
209*
and in most cases to the American coal mines for their necessary supplies. In that way the Cape Breton mines have lost their hold on the Canadian market.
And now that these brave soldiers who had gone to the front are back and willing to work, although many of them will never be back, having sacrificed their lives in the interest of their country,-those who have returned are anxious and willing to work but there is no market for the coal; consequently the men cannot get work and they and their families are suffering privations and becoming the victims of conditions that men of their standing should not suffer nor fear.
I must with all respect, and yet wi-th insistency, impress upon you the necessity of coming to the assistance of these men by purchasing the article which they produce, whether or not it may be more expensive than the same article imported from a foreign country.
As I stated above, this is not only a national question but it is also an Imperial one, as the conditions which now exist in the counties of Cape Breton and Inverness were brought about as above stated, not only in the interest of our own nation, but in the interest of the Empire and the Allies at large^
When you will look at your letter to me, I think you will realize that in the light of the foregoing facts the reasons you give for not buying more of our coal do not measure up to the gravity of the situation involved.
I am sending a copy of this letter to the Prime Minister, the Right Honourable Sir Robert L. Borden, G.C.M.G., and I trust that he will be of assistance to you in bringing about better conditions among the deserving and worthy miners in the counties of Cape Breton and Inverness.
Yours sincerely,
(Sgd) D. D. McKenzie.
Henry Lumley Drayton: May I ask my hon. friend a question? I take it from the correspondence that the price of local coal was higher than that of the imported product. Am I right?


Daniel Duncan McKenzie: It was contended that American coal was cheaper.


Henry Lumley Drayton: Does the hon. gentleman think that the American coal should not he allowed in; or does he think that the higher price ought to he paid for the Canadian coal?


Daniel Duncan McKenzie: I say that before the war we were not beholden to anybody; we had the market and we Were able to supply it. But our ships were taken from us and our men volunteered for service overseas; therefore it now devolves upon the nation to do all it can to help these people to get on their feet again until they get their ships back and regain control of the markets, even if the coal cost the nation more than a similar product from across the line. That is what I say, a#id that is what I contended for then.


Henry Lumley Drayton: If the hon. gentleman will permit me-he has asked

me to take the matter up with the Cabinet. I intend to do it, and of course I want to understand his case. I understand his case to be that as a result of the war the coal mine operators of Nova Scotia have lost their markets and that those markets are now occupied by the output of American collieries. What I want to find out from my hon. friend is this: does he desire that the markets should be conserved for the Canadian coal, or does he desire that we should pay a premium price to the Canadian coal mine operators? If the latter, how much does he say that premium price should be?


Daniel Duncan McKenzie: During the war, Mr. Speaker, we had a system of fuel control under which it was not open to the mine operator to sell his coal at whatever price he pleased. The fuel controller went fully into the figures; he ascertained what it was costing to produce the coal, and he fixed a price and said: You must sell your coal to the national railways at this figure. Now, it was quite possible that the Government could get coal at a price even lower than that fixed by the fuel controller, but we contended that in order to maintain our men, in order to enable the returned soldier to work who was willing to do so-who was only looking for an opportunity to swing his pick as he did before he went overseas-we contended that the people in Ontario, Manitoba and the other parts of Can' ada should be willing to suffer a slight disadvantage in the price of coal. That is what we are after, and if it is necessary to give a little higher price, I say: give a little higher price; let the officers and the experts of the Government in connection with coal fix what that price should be within fair lmits, and let the preference be given to Canadian coal and steel as against the coal and steel of foreigners who have a bigger market, bigger capital and bigger production than we have. I am bound to mention that not only were the ships of those Canadian companies taken away, but they were kept for a year or eighteen months after the war was over. Just when the war was over, they were sent off to Australia and they were kept away from us, because they had been hired out to other companies at a low rate, and at that time the charterers coufd get higher rates elsewhere and they sent them off. Our companies were obliged to bring suits in the Supreme Court 	_
in England in order to get an order to compel those other companies to give us back our ships, and after the cases were tried, we got our ships. During all this time, however, we were absolutely helpless; we could not get a pound of coal up the St. Lawrence while American coal poured in in every direction, capturing our market. The result was that we had to start all over again as if we were beginning to mine coal for the first time in our lives, having to make new connections because our old customers had gone. We are now making splendid progress, and with some sympathetic support from the Government and the Government railways in connection with steel rails and coal, we shall be able to get on our feet again. When we are on our feet and in a position to hold our own, we should be able to fight our battle without looking for any particular favour from the Government or any one else, except that I always take the stand, that from the national standpoint in the purchase of such national commodities as steel and coal, which are the very backbone and basic foundation of the wealth of any nation, and particularly ol our nation, the national Government ana the national industries should give preference to the national product as against that of another country. I take that position and I think it can be very well maintained. Although our coal may be a few cents higher in price, when you consider that our railroads will be carrying our own goods, and that directly and indirectly it is to the advantage of our own people that the Government and the Government railways should use our own coal, it will pay the Government to give the preference to the product of their own country. If they buy coal from the American, he gets his money, he puts it in his pocket, and he goes out of the country. Further than that he has no truck nor trade with my hon. friend. But if they buy coal from a Canadian, he gets the money and it goes from one hand to another, building up the trade and industry of the country and supporting the families of the Canadian people. That is the true national policy. I do not know whether some people would agree with it or not; but I break away from every tie when I bave thousands of sturdy; strong men who threw down their picks and went to the war, and who on their return, find their families requiring their support while their pay from the war is stopped. I would like to see anyone who would stop me from trying" to help them.

That is the position in which I am now in connection with those men.


Henry Lumley Drayton: I had rather thought that my hon. friend was accusing me of being a friend of the big interests. He seems now to be scolding me because I am an enemy of the big interests. In which capacity does he wish me to take up this question of coal and steel?


Daniel Duncan McKenzie: It is not the big interests in connection with coal and steel that are worrying me at all; it is the thousands and tens of thousands of men and women who must get the bite that goes into their mouths from what they earn from those interests. Those are the people about whom I am concerned, and incidentally, of course, benefits will come to capital, because we must not kill the goose that lays the golden egg. That is the position. The big interests are, as a rule, able to look after themselves; they usually have some money, and tliey can afford to bide their time until the psychological moment. The man who has five or six little ones waiting . for what their father brings home to pay for their breakfast, cannot afford to wait. Those are the people about whom I am concerned and whom I would like to see the Government help. If I had written that letter to-day, the minister might have said that I was trying to make a case; but that letter was written in August, 1918. It gave my views then and it gives my views now. I am pleased that the minister has given me such a sympathetic hearing, and after all, I am beginning to believe that he has some touch of humanity and human kindness. Nevertheless, there is the fact that, in the earlier part of the evening, I charged him truthfully with holding up a litlte boy who was carrying home a 25-pound bag of flour, untU he paid tribute to Csesar, and the minister was Csesar himself. I am willing to modify that to some extent provided that some good results will come from the discussion that we have had this evening.
I hope that, by some accident or otherwise, the Minister of Railways and Canals (Mr. Reid) when he comes back to the House, will read the few words that I am now going to say. I represent one of the oldest constituencies in Canada. The county of Victoria is as old and as well civilized a district as any on the continent of North America. The shores of Cabot strait, of which we have all heard, are in my county, and Cabot is supposed to have landed at a
place called Cape North in my county. Settlers came to that district in times far back, and they have been living in and developing the county of Victoria. The shores of Cabot strait, of which I speak, are 125 miles from the nearest railway. One would hardly believe that during all those years, there has- been in the county of Victoria a settlement 125 miles from the nearest railway. Ever since I came into this House, in Opposition or as supporting a government, I hai*e been trying to get railway facilities for those good, honest people. My one earnest desire before I leave public life is to see to it, if I can, that those people are brought into touch with outside civilization by means of a railway.
I came very near by objective, because in 1911 we got a vote to start this railway; a contract was let, and the work was practically under way when, unfortunately for us, a change of Government took place and everything went up in the air. Three railways were about to be built in Nova Scotia at that time, one in Halifax county, one in Guysborough county and one in my county. The then Prime Minister, I am sorry to say, built his own road in Halifax county; but like the man in the dream in olden days, he remembered not Joseph when he was in favour with the king. He did not build the Guysborough road, and he did not build my road. That part of the country has an abundance of fish; it is the most magnificent fishing ground in the world; there are also large quantities of pulpwood, which is now beginning to be very valuable; it is also a splendid agricultural country; but it has no railway, and I do hope that before very long something will be done to supply this great need. I am sure the road would not be a drag or deadweight if it was once built.
I am going to bring to the minister's attention what took place in the House in 1918 in connection with this matter. I have in my hand the journals of the House for 1919, and at page 97 I read this:
The House resumed the adjourned Debate on the proposed Resolution of Mr. McKenzie,- whereas on the 16th of March, A D., 1914, this Honourable House passed the following Resolution which was accepted by the Government.
You will note that the resolution in connection with the road was accepted by this Government, not by the Laurier Government.
Mr. McKenzie moved that, in the opinion of this House, the time has arrived for the extension of the Intercolonial Railway into the non-railway sections of the Maritime Provinces within reasonable range of the said railway.

That was the resolution that had already been accepted by the Government in 1914. Then on October 14, 1919, the Government accepted this resolution.
Be it therefore resoTved that, in. the opinion of this House, the proposals of the said Resolution of the 16th of March, A.D., 1914, should be carried forward to completion at the earliest possible date.
And the question being put on the said motion ; it was resolved in the affirmative.
The proposition for building this railway has therefore been twice accepted by the Government, in 1914, and again in 1919. I submit to you, Mr. Speaker, and to the House that there is no public undertaking in Canada in the same position as this road into the county of Victoria. The contract was let and the road practically started by a former government. In March, 1914, this House led by the right hon. the present member for King's (Sir Robert Borden) accepted my proposition that this road should be built. In 1919 I brought the matter up again, and the Government again renewed and accepted the proposition of 1914. It stands on the records of this House as having been accepted by the Government as a necessary and desirable undertaking to assume. I have already pointed out to you the splendid natural advantages of that section of the country; we have splendid fishermen, splendid farmers, capable men, but they are under the tremendous disadvantage of being such a distance from a railway. As the Government have already twice accepted this proposition, in 1914, and again in 1919, it is not surprising, Mr. Speaker, that I should take advantage of this opportunity of bringing this matter to the notice of this Administration in connection with other matters.
Mr. Speaker, I have taken more of the time of the House than I expected, but some of the things I have brought to the notice of the House, particularly in the latter part of my speech, are of such great concern to the people I represent that I felt it was my duty to do so, and to tell the Government that this railway in Victoria county is a business proposition, that it is in the interests of the county to undertake. We find no fault with the development of the West, with its railway building and settlement for the purpose of getting the advantages which these progressive movements will bring. Are we going to say to the descendants of the man who nearly two hundred years ago settled on the shores of Victoria county, and who, axe in hand, started to cut down
fMr. McKenzie.]
the trees and make a home for himself, and whose descendants to the third and fourth and fifth generation have lived on these shores, honest, straightforward, Godfearing, law-abiding citizens-are we going to say to them that they are not entitled to the same privileges that are accorded to the men in the West, in the Centre, and in the East of this country? I would be lax in my duty if I did not bring to the notice of the minister a good businesss proposition such as this, a proposition that has enough humanity in it and enough promise of national development to deserve the consideration of the Government and of the Minister of Finance. I have brought this matter to the attention of the Minister of Finance, in the hope that he may bring it before the Minister of Railways, and, of course, the record is there in the Journals of this House to speak for itself.
I have pointed out the sins of ommission and the sins of commission on the part of the Government. Having done all these things, I think that the responsibility of doing better in the future in connection with the ordinary business of the country, as well as in this special business that concerns the county I have the honour to represent, falls absolutely upon the shoulders of the Minister of Finance himself, and he will have no excuse in the last day unless he does what is right in connection with this matter. I conclude with the hope that he, and the Government of which he is a member, will, during the short time at their disposal, do better in the future than they have done in the past.


Mr. G. B. NICHOLSON (East Algoma):: Mr. Speaker, in rising to occupy the time of the House for a very short time in this debate, I do so almost exclusively for one specific purpose, and that is to draw the attention of the House for a few moments to that part of the Budget statement referring to the obligations of the country in connection with the Canadian National Railways. I want first, however, to refer briefly to just one or two statements made by the hon. member for North Cape Breton and Victoria (Mr. McKenzie), who has just preceded me, and incidentally I might say that in the main they have reference in one way or another to the whole railway question.
I would refer first to his statement in regard to the floatation of Canadian National Railway bonds in the city of New York, to which transaction he took very

strong exception, and upon which he made some very definite statements. One was to the effect that while the province of Nova Scotia could float its bonds in New York at 102, the Canadian Rational Railways, or, as he said, the partner of the Government, were floating their bonds at 91, 95 and 96. The facts are these. The province of Nova Scotia floated its bonds at 102 payable in Canadian funds in New York, which meant to the province of Nova Scotia 87 cents on the dollar. The Canadian National Railways, having to liquidate a block of bonds falling due in the city of London, bonds that were issued years ago when the Canadian Northern Railway was financing and operating its own business, went to the city of New York and floated these bonds at 91, 95 and 96, not in Canadian funds, but in New York exchange against London exchange, and thereby saved to the people of Canada, through the National Railways, the sum of $6,000,000. In other words, for bonds at par, sufficient to retire the bonds that will mature in London in the month of August this year, the Canadian National Railways sold a block of bonds which they had in their treasury, guaranteed by the Dominion of Canada, at a sum that just simply reduced the liability by $6,000,000. And that is the transaction to which my hon. friend takes such direct exception, and for which he so roundly condemns the Minister of Finance.
The hon. member, speaking with regard to the Canadian Government Merchant Marine, referred to a statement made by Mr. Bosworth in the city of Vancouver, that it was possible to buy shipping at the present time on a gross ton basis of $50 per ton. He did not tell us, at the same time, that the Canadian Pacific Railway, just as the Canadian Government, have ships on the stocks under construction, which will be completed this year, costing them very close to $200 per ton, the Canadian Pacific Railway having entered into these contracts at a time when the price of shipping in all parts of the world was at that figure. The fact that tonnage has now gone down does not relieve the Canadian Pacific Railway, however, of their obligations in connection with these contracts, any more than it relieves the Government of theirs.
Mr. DuTREMBLAY:	Are they the
same kind of ships?


George Brecken Nicholson: Steel ships. Now,
one other matter to which I wish to refer
Is the right-about-face which my hon. friend took on the subject of trusts, in an effort to make a case against the Government. The hon. gentleman said that in the city of Sydney, I think, or at all events in his own city, there was a steel and coal trust, who were squeezing the very life out of the Canadian people by the extortionate prices they were charging for their goods. In the very next breath, however, he tries to make a case against the Government because they had not forced the Canadian National Railways to pay this trust a price for its goods higher than the price at which they could buy the same goods in other places. But that is on a par with the hon. gentleman's arguments with regard to the management of the Canadian National railways. He condemns the Canadian National Railways for not adopting business management, and then he immediately turns round and censures them because they do not pay any attention the importunities of a member of Parliament to buy goods in his constituency when they can buy the like goods at a less price in other parts of the country.
The hon. gentleman bases a very plausible case on the fact that there are men in the city of Sydney who are out of employment. Well, there are men out of employment in Ottawa, in Montreal, in Toronto, in Winnipeg, in Vancouver,-men who could be put to work building locomotives and cars, laying tracks and building bridges, and doing works of this kind for the Canadian National Railways, if the Government would furnish the money to meet exorbitant rates. Would it be good business management on the part of the Canadian National Railways to embark on a policy of that kind? If the efforts of the hon. member for North Cape Breton and Victoria can influence the management of the Canadian National railways in any one case, where will it end?
My hon. friend made the statement that it matters not how hard the Government may try-I think these were his words- "we are not going to be drawn into a contest on the tariff." He says: "We will fight you on shipping, we will fight you on the railway question, we will fight you on anything else; but we had a convention in the city of Ottawa in 1919, and we drew up a platform and laid down a set of political principles which we claim to be identical with those of our friends immediately alongside of us, and you cannot draw us into a political contest on that platform; nothing doing. We are going to get away

from that platform,"-just as the hon. member for Shelburne and Queen's got away from it by moving the amendment which he proposed to the resolution to the Minister of Finance.
The hon. member found fault because the Government of Canada had granted credits to European countries to enable them to buy Canadian goods. Let me express my personal opinion on that subject. I think that if it were possible for Canada to continue granting credits to European countries to enable us to sell our goods to those countries, Canada would not be passing through the period of depression which she is experiencing at the present time. As I say, that is merely my own opinion. The hon. member said that if it had not been for these credits, and for the fact that thereby an avenue had been opened up through which Canada could export pork, beef, butter, cheese, etc., the prices of these commodities would have been depressed . down to a point that would have made it very much easier for the Canadian people to buy these things. I wonder what my hon. friends of the Progressive party think of a policy of that kind. The hon. member would make it so difficult to export the surplus products of this country that those products would be dumped on the market in such volumes that the Canadian people could buy at prices below value. Now, that is a sample of my hon. friend's political opinions.
Coming to the theme upon which-1 wish particularly to address the House for a few moments, namely, the Canadian National railways, I desire to make, first of'all, a brief statement by way of introduction. I believe I have the support of the House and of the country when I say that there is perhaps no more difficult question before the Canadian people to-day than the railway situation. I doubt whether there has ever been before this Parliament a civil question of greater difficulty or of a more complex character than the proper solution of the railway problem as it presents itself at the present moment. I am not going to go into the history of the railway question; I shall not refer to the way in which we got into this position. I do not believe we should get very far if we entered into any discussion of that kind. In my opinion, the only solution of the problem will be found in facing the situation as it is and in endeavouring if we can to find a solution for it. One of the things which, I think, are making it more difficult to solve the problem is the tendency 
throughout the country to exaggerate the real situation. I do not know of any matter that has ever been so manifestly misunderstood, and in connection with which there seemed .to have been, on the part of some persons at least, so great a desire to misrepresent things and to create in the minds of the people the impression that the whole affair was absolutely insoluble- in other words, to break down the morale of the people on the whole question. Why that is I do not know, but as indicating the truth of this statement and the extent to which people go in that regard, I wish to quote some figures published in the Montreal Star of March 19, and issued by Mr. J. L. Payne, at one time statistician of the Railway Department. I have no idea what induced him to issue the statement he did. He may have issued it out of a desire to state the facts as they were before the people. But be that as it may, the statements are so exaggerated that one can only reach the conclusion that they were published with the intent of leading the public to believe the situation was something entirely foreign to what it is. Mr. Payne sets out that the total liability the peonle of Canada are carrying on ac. count of the Canadian National Railways is $2,274,125,057, made up as follows:
Intercolonial	$563,000,000
Canadian Northern	 624,000,000
Transcontinental	 250,000,000
Grand Trunk Pacific	 279,000,000
Grand Trunk Pacific branch lines. 17,000^000 Grand Trunk Railway of Canada. .	464,000,000
Canadian Northern branch lines. .	10,000,000
Quebec and Saguenay	'	8,146,189
Quebec Bridge	 22,000,000
Canadian Northern System	 35,000,000
In order to arrive at these figures Mr
Payne puts the original cost of the Intercolonial railway and its branches at $152,300,044 and he brought that up, on a compound interest basis, to the present figure of $563,218,701. Now, as I said a moment ago, if I can understand the figures at all, they were put forward with the object of leading the people of Canada to believe that they were carrying these obligations because of having launched on a system of publicly-owned railways. But let us look at the figures for a moment and when we do . so we find that the liability on account of government-projected lines, the Intercolonial and the Transcontinental, amounts to $813,218,701 which if taken from Mr. Payne's total leaves $1,460,906,316. Carrying this calculation a little further we find that according to the last statistical report at present available, and prepared by Mr. Payne himself, the

bonuses granted to privately-owned railways amounted to $161,398,696, to which is to be added guarantees earned of $344,672,933, and the proceeds from the sale of 44,648,123 acres of land which, put at $2.25 per acre, gives $100,345,276 making a total of $606,504,905. Applying to these the same method of calculation as Mr. Payne applied to the Intercolonial, and compounding the interest afterwards, we find that it makes a total liability on account of subsidies to privately-owned railways of $2,426,019,620. Add this to the liabilities given by Mr. Payne himself on account of the Canadian Northern, and Grand Trunk and Grand Trunk Pacific railways and the grand total is $3,332,925,936 for which, on the basis of Mr. Payne's calculation, the people of Canada would be responsible on account of their direct assistance to privately-owned railways, as against $813,218,701 on account of publicly-projected railways. But from the last figure we should take $250,000,000 on account of the National Transcontinental Railway, which arose out of a contract entered into by a privately-owned railway, the Grand Trunk. This reduces the amount to $563,218,701 on account of publicly-owned railways as against $4,082,925,936 on account of privately-owned railways. If we wish to pursue this method of financial calculation to its logical conclusion and take in the moneys we have spent on canals, river improvements, wharves, and all that kind of thing we would find we have an amount equal to all that has been spent on railways, and it would bring the total liability on account of our transportation systems up to a figure between -seven and eight billions of dollars.
Now, Mr Speaker, my only object in presenting these figures at all is to show the length to which one can go in exaggerating a situation such as this, and also, if possible, to show the desirability of finding out ourselves, if we can, what the actual position is. It may be true that worked out on a strict basis of financial calculation, or a book-keeping basis, from the time of Confederation up, our liability on account of the Intercolonial railway is what Mr. Payne has stated it to be; but the same thing applies, in an equal degree to our canal system, our river improvements and everything else of that kind that we have.	[DOT]
In this connection what seems to me to be a vital point is that it is
10 p.m. not fair to the Canadian National Railways, that the situation should be so exaggerated. What we want to know is what our actual obligations are in connection with these railway systems and what they must earn annually to pay their way, confining ourselves strictly to what properly belongs to the railway, and then from that standpoint endeavour to work out a plan by which we can make railways carry their own obligations. The fact is that we have these railways, approximately 22,000 miles in extent, projected into every part of this country from the Atlantic ocean to the Pacific-railways that are absolutely necessary to the industrial life of this country and railways, in very many cases, without which we cannot possibly get along. It may be difficult but let the load be as heavy as it may be, we have to carry it. We have to operate these railways, we cannot get away from it, and the question simply narrows down to this: what does the whole thing mean in dollars and cents and is there a solution for the difficulty.
Starting from that point let us see what the annual obligations are for which we are responsible in connection with these railways. I take first the Grand Trunk, and just let me say briefly that my reason for taking the Grand Trunk is that I look upon it as an absolutely essential that the Grand Trunk shall ultimately become parr of the Canadian National Railway system no matter what scheme we may later develop for its operation. On five per cent Grand Trunk debenture stock the obligation is $1,694,409; four per cent Grand Trunk debenture stock, $4,845,104; four per cent guaranteed stock, $2,430,000; on the first, second and third preference and common stock, the value of which is being arbitrated, $2,570,000; total $11,540,320. Which for the purposes of reasonable calculation should be reduced by $1,285,000 which is equal to one-half the amount of the possible award under the arbitration, leaving a net balance of fixed charges against the Grand Trunk Railway, of $10,255,320. On the Canadian Northern-as per statement of the Minister of Railways to be found on page 1052 of Hansard-$24,155,988; Grand Trunk Pacific $9,332,776, less the amount which should properly be written off on account of over-capitalization, $7,228,600, leaving the amount properly chargeable on account of that railway at $2,104,176. I want to say a word with regard to that. It will be noted that I have mentioned an amount of $7,228,600 annually that should be written off on accoupt of ever-capitalization on the Grand Trunk Pacific Railway. My reason for doing

that is, that we should never expect the Grand Trunk Pacific Railway to earn interest on money that did not actually go into the railway, and no man who gives the question even the slightest degree of study whatever will undertake to argue that the total amount of liability charged against the Grand Trunk Pacific ever went into the legitimate construction of a railway.
Now, let us take the National Transcontinental Railway and the liability on this line means a carrying charge of $12,500,000. Prom that again we should write off $7,150,000 for identically the same reason, leaving the annual charge $5,350,000. For purposes of operation, however, the amounts set against the Grand Trunk Pacific and the National Transcontinental should be eliminated for at least a period of ten years. As a railway proposition neither one of them can be expected to earn its operating costs and fixed charges for at least a period of ten years, and if the Canadian people entered upon an enterprise of that character they have a right to carry the load without expecting the railways to earn it. That leaves the net amount properly chargeable to the operation of the railways at $35,696,309.08 on account of present obligations. To this should be added the carrying charges on the operating deficit for 1920 on the Canadian National railways, amounting to $36,842,970.17 and the deficit in fixed charges on the Grand Trunk of $6,563,091.33, making a capital charge of $43,406,061.50, which means an annual charge of $2,387,333.37.
Then comes the question of completing and equipping the lines, for which approximately the sum of $250,000,000 will be required, upon which there will be an annual charge in round figures of $13,750,000, making the total annual fixed charges on all of these 22,000 miles of railway $51,833,642.45.
This year we have deficits in operation of $36,842,970.17, made up as follows:
Canadian Northern	$16,258,579	80Canadian Government.. ..	10,449,876	43Grand Trunk Pacific	
10,134,513	94
In making up this statement of carrying costs it will be noted that there has been included an annual charge on the sum of $250,000,000, estimated as required to bring the lines up to standard. In putting in that figure and making that statement I do so for the reason that I am convinced that the sooner the Canadian people get to know what is the exact situation the better for them and the better for the railways them-
[Mr. Nicholson.!
selves. I will come to the details in regard to that a little later.
In the meantime the question is: Is this financial obligation of such a character as to cause us to feel that it is greater than the Canadian people can legitimately face in connection with these transportation systems? Let us get the matter clearly in our minds. We have 22,000 miles of railway, and the problem is to make these railways earn their operating costs and a capital charge of $51,833,642.45. Again the problem is, can we do it? My personal opinion is that we can. The experience of the past two years would indicate that we cannot, but the question is:	Has that experience been of such a character as to convince us that these railways are destined to be a failure? Again I say my personal opinion is that not only do I believe that the railways will not be a failure, but I believe that, properly co-ordinated, properly organized and efficiently operated, thew will ultimately prove to be a very great asset to this country.
In looking for an answer to that, however, we might first ascertain what our situation is in regard to railway mileage. It has been freely stated from time to time in this House and by the press of this country that the railway mileage in Canada is entirely out of proportion to the population-to some degree that may be true-and that certain of that railway mileage should be eliminated. Just here let me say briefly that in the co-ordination and organization of our Canadian National railway lines there are duplicate lines that should be wholly eliminated, situations where two lines of railway owned by the Canadian people are running so close together that you can throw a stone from one train to the other. The point, however, is, have we reached the place where our railway mileage bears such a proportion to the business that the railways have to do that it cannot be expected that they can earn their operating costs and fixed charges and at the same time give adequate service at reasonable rates.
On the subject of railway mileage in proportion to our population, frequent reference is made to the mileage of our railways as compared to that of other countries. We must always bear this in mind, however, that with the same mileage of railway you cannot serve people scattered over a country the size of the Dominion that would serve the same number of people if they were situated on the island of Montreal. And yet if all the

people of Canada were living on the island of Montreal they would bear a relation to our railway systems that the same number of people do who live in the cities of Liverpool and Manchester. It is true that our railways may have been projected a little too soon, but comparing Canada with the United States it will be found that we require to less than double our population before our railway mileage in proportion to population will be just about equal to the railway mileage of the United States in proportion to the population of that country. I do not think that we are anticipating the future to too great an extent when we say that the time is not far distant when our population will be doubled.
But making a comparison with conditions in Canada before the lines of the National Transcontinental, the Grand Trunk Pacific and the Canadian Northern were projected, on the basis of the traffic producing possibilities of the country, it will be found that the comparison of freight tonnage available for all Canadian railways is as follows:
In 1900 total number of ton of
freight handled	 35,946,183
1905	 50,793,957
1910		 74,482,866
1915		'. ..	87,204,833
1919	 116,699,572
Or an increase just about three and a half times within the period.
The number of passengers carried in 1910 was 2,466,729,664; in 1919 that number had increased to 3,074,664,369. The gross earnings of all Canadian railways in 1910 were $173,956,217; in 1919 they had grown to $382,976,901, or nearly two and a quarter times. Speaking on this subject a short time ago the hon. member for Halifax (Mr. Maclean) told this House that we did not handle as many passengers on our railways in 1920 as we did in 1919, and on the strength of that statement he built up an argument to show that we had gone over the peak, so to speak, and that our railway business was now declining. The explanation is very simple. During 1919 our army was brought back to Canada and demobilized and the men were sent to their homes, making a tremendous increase in the number of passengers carried. From those figures it will be seen that we have more tonnage and more passengers per mile of railway than we had before the Canadian National railways were projected.
Let me give one other comparison. In 1895 the earnings of all the railways in
the territory now served by the Canadian Pacific Railway, the Canadian Northern, the Grand Trunk Pacific and the National Transcontinental were in round figures $38,000,000. The earnings of the railways in the same territory in 1920 were $297,745,297.76, an advance of almost eight times. I am pointing these things out because I feel that the situation has not been understood, and, as I stated a moment ago I think the sooner the people get to know just what the situation is the easier it will be for us to find a solution.
All this, however, does not get us away from the fact that there are deficits, and serious deficits, and for these we have to seek a remedy. In looking for an explanation one naturally turns to the report of the Board of Directors of the Canadian National Railways submitted to Parliament by the hon. Minister of Railways (Mr. Reid): I may say that I was personally very much disappointed when that statement was presented by the Minister of Railways as the report of the Board of Directors of the Canadian National Railways to the Government and to Parliament. Faced with such a serious situation in connection with this railway problem, it seemed to me that the Board of Directors should have made a complete survey of the conditions and should have stated to the Government and to Parliament in plain terms just what their opinion was as to the solution of the difficulty, if they could suggest any. If they could not suggest a solution, they should have come forward and said frankly that they looked upon the successful and economical operation of the Canadian National Railways as an impossibility. But when you scan the statement from end to end you find but two references to the deficits or to any possible solution of the difficulty, to any possible remedy for these deficits. One is the statement to be found at page 1053 of unrevised Hansard, in which the hon. minister stated that the management figured on considerable reduction in the deficits on operation owing to the curtailment of train services, reduction of maintenance forces, and other economies. He went on to say that they also expected a readjustment in the price of materials and in the wage schedules and working conditions. Again, on page 1055, the minister states that the solution of the problem is one which will require joint action by the management and employees. With the exception of the reference to the curtailment of train services, these statements

referring to prices for materials, wages paid to employees, as the result of the several McAdoo awards, etc., do not in my judgment present that comprehensive review of the whole situation which I think the Government and the House had a right to expect from the Board of Directors of the National Railways, faced as they are and we are with present conditions.
_ As to the added cost of material and the increased wages paid to employees, as I view the situation these are merely details in connection with the whole problem which will naturally and essentially work themselves out. If excessive rates are in effect, if there are inequalities in services, I am confident that the common sense of the men and of the operating officials will, if the problem is properly taken hold of, work out an adjustment which will be satisfactory to all parties. The whole record of the relations existing between railway operators and railway employees during the last thirty years is of a character to justify the conclusion on the part of any one who studies the question that railway employees will not and do not ask anything unreasonable.
Just here, Mr. Speaker, I wish to refer briefly to what I consider to be a campaign of unjust misrepresentation which is going on from one end of the country to the other with regard to the railway employees of Canada, not only on the Canadian National railways but on all railways. A systematic effort has been made in this House, through the press and by statements given out by certain railway officials to create the impression that the employees on the Canadian railways as a mass are receiving a base rate of wage out of proportion to that received by any other class of workingmen in this country, I wish to say, Sir, that such is not the fact. You will find that the base rate of remuneration paid to a railway conductor, a train despatches a machinist or a locomotive engineer on the Canadian railways is not as high as the base rate paid to bricklayers in the city of Toronto, not as high as the base rate paid to stonemasons working on the tower of this building. These men- railway conductors, locomotive engineers and train despatchers, are charged with the most responsible duties that any class of men can be charged with in this country. Let me just give you one little illustration: go to the train despatcher's office in either of the railway terminals in this city, the Canadian National or the Canadian Pacific, and what do you find? You fMr. Nicholson.]
find a man going on duty to-night at twelve o'clock and sitting down before a train sheet having to do with thirty, thirty-five, forty, perhaps fifty trains running in each direction on the section of line over which he has control. It is his business to keep these trains clear of each other, and if he makes a mistake of one single word,
* yes, in many cases of one single letter in a train order, he not only loses his position but he renders himself liable to prosecution before the courts on a charge of manslaughter. Many of these cases are happening from one end of the country to the other; yet we find the chairman of' the Board of Railway Commissioners going from coast to coast creating the false impression that these men are paid at exorbitant rates. I say again that the base rate upon which their remuneration is calculated is not as high as the base rate upon which is calculated the remuneration of bricklayers in Toronto.
Returning to the other matter referred to, namely, the curtailment of train services, an analysis of the operating results on the several parts of the Canadian National railways leads to the conclusion vthat when the Board of Directors stated that they expected to reduce the operating deficit because they did not expect to handle so many trains and because they expectec to effect certain economies in that regard they were speaking from actual experience If the whole operating statement'of the railways is taken into account and analysed it will be found that the more traffic they handled the worse off they were; that on the parts of the line where they had the heaviest traffic they sustained the heaviest deficits. If you carry that to its logical conclusion you will say at once that if you reduced the whole National Canadian Railway system to impotence, to a point where it would have no traffic at all, you would thereby reduce the annual deficits. There is something in that; I expect you would, on the basis of the statements that have been made.
In that connection I would like to refer briefly to what the operating figures really are. The Canadian Northern operating revenue for 1920 was $6,764 per mile; operating cost, $8,414, a deficit of $1,650 per mile. On the Grand Trunk Pacific the operating revenue was $5,278 per mile, the operating cost $8,993 and the operating deficit $3,715. On the Canadian Government Railways the operating revenue was $10,536 per mile, the operating cost, $13,135, and the operating deficit $2,559. In making up the returns of operating revenue

the report does not give the revenues of the Intercolonial and the Transcontinental separately, but it does give the operating deficits separately. Working it out on a mileage basis-and I would like to emphasize this point, the result is as follows: the operating deficit on the Intercolonial was $4,325 a mile, and on the Transcontinental-that part of the line running from Moncton to Winnipeg, the leanest part of the whole system-$1,386 a mile, bearing out the statement of the directors themselves that by reducing the number of trains-by doing less ^business, if lyou will-they hoped to reduce the deficit.
Let us make a further comparison. The figures given in the statistical report of the Railway Department for 1919 show that the operating revenue of the Intercolonial Railway was $16,776 a mile, the operating cost $18,842, showing a deficit on the Intercolonial for that year of $2,066. Compare this with the operating revenue and operating cost of the Canadian Pacific Railway. For the same year it will be seen that, with an operating revenue of $13,156 a mile, the Canadian Pacific had an operating cost of $9,731 a mile. Just let me repeat that. While' the Intercolonial, with an operating revenue of $16,776 a mile had an operating deficit of $2,066 a mile, the Canadian Pacific, with an operating revenue of only $13,156 a mile, had an operating surplus of $2,421 a mile.
What seems to me to be an illuminating comparison, can be drawn between the operating cost of the Canadian Pacific and the operating cost of the Grand Trunk Pacific. In 1919, the last year for which a statistical report is out, the operating cost of the Canadian Pacific was $9,731 a mile. In 1920, the operating cost of the Grand Trunk Pacific was $8,993 a mile, or a difference of only $738 a mile. When you turn to the operating revenue, you find that, with an operating cost of $9,731 a mile, the Canadian Pacific earned $12,152, as against $5,278 earned by the Grand Trunk Pacific with an operating cost of $8,993 a mile. If those reports mean anything, they mean that, as the system is operated at present, the more traffic the lines handle, the greater the deficits that we are going to have. Is the conclusion, however, that the only way to reduce the deficits on those lines is to reduce the business, an inevitable one? Is it wholly unavoidable that we must, of necessity, pay more for carrying a ton of freight a mile than we receive for carrying that ton of freight a mile? All
the figures so far presented would bear out the contention that that is the situation. But let us examine the matter just a little closer in order to see whether these figures are wholly justified. Let us take the mileage earnings for 1919 and 1920 on the Intercolonial, Grand Trunk and Canadian Pacific. In 1920, the Intercolonial had an operating revenue of $16,776, the Grand Trunk, $19,942 and the Canadian Pacific, $13,156 a mile. Hon. members will note that both the Grand Trunk and the Intercolonial had greater operating revenue per mile of their line than the Canadian Pacific had. In 1920 the operating revenue of the Intercolonial increased to $19,629, that of the Grand Trunk to $23,528 and that of the Canadian Pacific to $16,164 per mile. That shows that, in 1919, the mileage earning of the Intercolonial was 22 per cent more than that of the Canadian Pacific and that the mileage earning of the Grand Trunk was 34 per cent more than that of the Canadian Pacific. In 1920, the comparisons were 18 per cent for the Intercolonial and 31 per cent for the Grand Trunk higher than the mileage revenue of the Canadian Pacific. If the ratio of operating cost to operating revenue had been the same on the Intercolonial and Grand Trunk as it was on the Canadian Pacific, the net result would mean a profit on the Grand Trunk of $12,800,000, and a profit on the Intercolonial of $9,056,495, or a total net revenue, instead of deficits, of $21,856,495. If we take this figure of $21,856,495, the operating revenue that we might reasonably have expected from the Grand Trunk and the Intercolonial, it would reduce the fixed charges to be provided by the people of this country through Parliament to the sum of $29,977,147, provided always, of course, that the other portions of the lines had earned their operating costs. In any ease, it would reduce the operating deficit by the sum of $6,549,629.48, the amount of the deficit on the Intercolonial alone.
My point in connection with this is as follows: Is there any good reason-why the Intercolonial railway and the Grand Trunk, projected and built as they were, equipped as they are, running through a densely populated country with a traffic averaging 20 per cent greater than that which the Canadian Pacific has on the whole of its mileage, should not be able to earn their operating costs and fixed charges? I say at once that there does not seem to be any good reason why they should not earn their operating (osts and

fixed charges. Right there is where I believe we touch the vital point. Bring the operating efficiency of the Canadian National railways up to standard, and our deficits will be automatically wiped out. I do not wish to take a harsh position. Every one must recognize that the organization of a railway system such as the Canadian National railways is not a simple matter, and we - have no right to expect that these railways should earn their operating costs and fixed charges, as a whole, in the first few years of their existence. But there does not seem to me to be any good reason why two lines such as the Intercolonial and the Grand Trunk, should not earn their operating costs and fixed charges, if nothing more.
Just one other illustration. What was accomplished on the National Transcontinental from Moncton to Winnipeg last year, which is as I said before, recognized as the leanest part of the whole Canadian National system, where the operating deficit was brought down to a little more than a thousand dollars a mile, is evidence of the fact that the application of efficient operating methods on all parts of the system, should, at least, make those lines maintain their operating costs and gradually work up to the point where they could earn their fixed charges. I am aware that it is easy to make abstract statements and say what ought to be done, when it may not be so easy to say how it could be done; but there are certain general principles underlying this whole question that are applicable, and I believe a study of the whole operating figures will convince any one, at all familiar with the matter, that it is possible to bring those railways up to such a state of efficiency that they will earn their operating costs and all of their fixed charges, including interest on the capitalized deficits that may occur on parts of the line during the next five to ten years.
In a statement given to the press by the Board of Directors of the Canadian National Railways a short time ago, it was stated that this whole matter was a financial one. It is a financial one in this regard: either the railways must either earn the money with which to pay their operating costs and fixed charges, or the people of Canada will have to pay that money out of their pockets. But in the final analysis, the problem resolves itself into nothing more and less than the proper co-ordination of a great national system of railways and their efficient and economi-

cal management. The question is: Can those railways be so organized? I believe they can; but they can be organized only if, as I said at the beginning, we face the issue fairly and squarely and set our minds determinedly to find the right solution.
At the beginning of my remarks I gave a figure of $250,000,000 as the sum that would be required to put the whole Canadian National railway system into such a state of efficiency as would make it possible to operate it economically. That is a large figure. I mentioned that to a gentleman a few days ago, and he said: "If you went out and told the Canadian people that they would be expected to spend an additional $250,000,000, on the Canadian National Railways, they would say:	"Scrap the
whole outfit." We are faced with one or two alternatives. Either we shall have to spend the money, or we might just as well scrap the whole outfit. You cannot run a railway any more than a business, if it is not properly equipped. Before you can operate a railway you	must have
the railway itself.	You cannot simply run a railway along a barbed wire fence, or on a trail that you may trace out through the bush. You must have a proper road-bed to run it on; you must have proper equipment, proper terminal facilities, round-houses and everything else that goes into a railway. After all, if we could get away from the situation we are faced with in 1921 of putting $70,000,000 into the Canadian National railways to wipe out the deficit on the roads, by spending enough money to bring the railways up to a point where they can be operated efficiently, would it be good business to do that, or would it not? Take the case of any other business you like. Give a man 1,000 acres in Western Canada; let him spend money on it, fence it, and erect buildings on it, and get it all ready for cultivation. After he has done all that, if he only has machinery and equipment enough to cultivate one-tenth of his land he would not very easily earn his operating costs and fixed charges on that
1,000	acres, but if he spends money enough to equip himself with the proper machinery there is a possibility that he will make the thing a success-and the same thing applies to the organization and operation of the Canadian National railways.
In 1918, when the subject of the Canadian National railways was before the House, I took the liberty of making a statement with regard to the then existing conditions on the group of railways comprised

in the Canadian National railways and the Grand Trunk, and I gave the estimated cost of bringing these roads up to standard. That will be found in the Hansard of that year, from pages 2041 to 2051. I have given the situation further study and I have reached the conclusion that the statement that I made at that time was as close to being correct as it possibly could be. I at least have found no reason to change the estimate that I made at that time, and in making that estimate I had the assistance of men who know something of the railways of this country. It is difficult to make an absolutely accurate estimate of the present position for the reason that very considerable sums of money have been expended both on the Canadian National and Grand Trunk railways, the details of which are not available. There are, however, certain facts manifest to any one who will study the reports at hand and the situation generally, that enable us to reach a fairly accurate conclusion. To furnish the lines at present under the management of the Canadian National railways with freight cars will take approximately $75,000,000, and for passenger cars $20,925,000. This would provide approximately 20,000 standard freight cars, 1,500 flat cars, 1,000 stock cars, 1,000 coal cars, 1,000 refrigerator cars, 2,500 miscellaneous and road cars, and 150 tank cars, and others; I need not go into the details.
For locomotives, the sum of approximately $40,000,000 would be required, and this would provide 550 modern passenger and freight locomotives of the different types required, and from 200 to 225 switch engines, making a total for rolling stock alone of $135,000,000.
In 1919 I, put the sum required to bring the Canadian National railways up to standard in road-bed, intermediate and terminal facilities, round-houses and water services at $75,000,000, the sum required for the same services in connection with the Grand Trunk Pacific at $25,000,000, and for the Transcontinental $22,000,000. Since that time very considerable and substantial improvements have been made on these lines, and the merging of the Grand Trunk with the Canadian National railways will reduce by a very considerable sum the amount necessary for terminals for the Canadian National railways. At present I believe that a close estimate of what will be required to bring the road-bed, and all the facilities that go into what you might call the road-bed itself, up to standard, will
be from $65,000,000 to $75,000,000, making the total for the Canadian Northern, Transcontinental and Grand Trunk Pacific in the close vicinity of $200,000,000 to $225,000,000.
The situation with regard to the Grand Trunk proper, both in relation to its cost and the sums required to bring it up to standard, were set forth in the statement I gave in 1918, and here again, after examining that statement closely, I have no reason to change the estimate I then gave. As with the Canadian National railways, however, there have been expended in the meantime considerable sums on capital account, and the Government itself has paid directly for a considerable number of locomotives, cars, etc. The road bed and general equipment of the Grand Trunk including terminals is admitted to be in really good condition. Some improvements are necessary, but the extent of them is not yet known. Economic operation, however, will make necessary the expenditure of a very considerable sum of money in the purchase of motive power and rolling stock. In 1919, at the time the Grand Trunk question was before the House, I put the figure for motive power alone, in order to bring it up to an economic standard, at $35,000,000; I do not wish to weary the House by going into all the details. As a matter of fact, the officers of the Grand Trunk Railway Company have themselves made the statement before the Drayton-Acworth Commission that they required $50,000,000 to bring their rolling stock and general rolling stock equipment up to the standard, they requiring 200 locomotives and 10,000 box cars. While there have no doubt been additions in the meantime, it can nevertheless be taken for granted that there is required to-day, or will be when the Grand Trunk is co-ordinated with the Canadian National Railways, a sum approximating to $50,000,000 to bring that part of the Canadian National railways to a point where it can be operated economically and efficiently.
The question is, can the country face this expenditure and face the problem of operating these railways? The answer to that is that we have the railways, and whether the task is easy or difficult, we have to operate them; we cannot get away from that. The industry of the country demands that we should' find a way to operate these roads economically, and in that connection might I say one word with regard to the statements that have been issued so many times about the operating deficits

being due to excessive wages and excessive material costs? I have no doubt that these things will work themselves out, but I think I am in the judgment of the House when I say that there are a lot of people in this country looking forward anxiously to the time when freight and passenger rates will be reduced as a result of the operating cost of the railways being lowered; but if we are to accept the statements that are being given to us from time to time, it would look as though we were going to be loaded with the present freight and passenger rates for all time. I believe that any one who studies the situation that this country is faced with will agree with me when I say that we must find some way of organizing and operating our railways so as to bring the cost of transportation down, as well as to wipe out the deficit. I have already stated my belief that our railways can be co-ordinated, can be organized, and can be operated, without these constantly recurring deficits, and operated so that they will earn their fixed charges. But the question is, how is this to be done? It is very easy to make academic statements as to what ought to be done, but it is not so easy to suggest a way by which it should be done. Now, there have been very many suggestions put before the Canadian people in one form or another as to what the solution of the railway problem is and how we should operate the lines so that they may be successful and that the Canadian people may be relieved of the present burden in connection with the railways. If the House will bear with me I will refer briefly to a few of these suggestions. The first suggestion is to turn all the lines back to private control.


An hon. MEMBER:: Hear, hear.


George Brecken Nicholson: An hon. member opposite says, "hear, hear;" well, that is a very easy thing to say. I should like some one, however, who says that we should turn back the railways to private control, to show me a group of men who would be willing to undertake to operate these railways economically and efficiently, and give the people satisfactory service. It is a very simple thing to say, turn the railways back to private control; and it was equally easy to say in 1917, 1918, and 1919 that we should have left them under private control. If we had talked that way in 1903, 1904, and 1905, there might have been some reason in such suggestions. But faced with the present problem, I should

like any man to show me the means by which we can turn these lines back to private control with a reasonable guarantee for efficient operation.
Mr. DuTREMBLAY: What do you think of transferring the railways to the Canadian Pacific Railway?


George Brecken Nicholson: I was just coming to that. The second suggestion one hears is that we should merge all the railways of Canada into one great system. There are two schools of thought in regard to that suggestion. One school advocates putting all these lines into one great system and operating them as one publicly-controlled concern; another scholool says that we should combine them all into one system and operate them privately. And in that connection we have the suggestion, in a letter to the Right Hon. the Prime Minister (Mr. Meighen), from Lord Shaugh-nessy, to turn them over to the Canadian Pacific Railway. Any statement made by Lord Shaughnessy on the railway question in this country must be given some consideration, because-and I do not believe I am overstating the fact-he is one of the most outstanding railway organizers and operators that the American continent has ever produced.
I shall deal with this question of merging all the Canadian railways into one great system, both from the aspect of public ownership and from that of private control. The country, Mr. Speaker, requires something more than the mere earning of operating costs by its railways; it requires service. Service means as much to the Canadian people in connection with the operation of the railways as does the wiping out of the deficits on the Canadian National railways. Unless we can be assured satisfactory service, I have very grave doubts as to whether we should gain very much by reducing the deficit. Now, I just put this question: What has made the Canadian Pacific Railway the success which every one looks upon it as being today? You say at once that it is the efficient management and operation which it has had. Well, I agree absolutely with that. And what was it that produced that efficient organization? It was the stern, determined competition which the Canadian Pacific railway encountered right from its inception, and which made it absolutely necessary that it should develop just that kind of organization; otherwise it could not have carried on successfully. The question is, if you put the whole of the railways

of Canada into one great merger and operate them, either under private control, or under public management-private control, with dividends to the stockholders guaranteed for all time to come,-is it reasonable to expect that we are going to get that type of service which we should receive as a result of the competition that at present exists? My personal judgment, so far as that is concerned, is that while it may be ideal-there are a great many things that are ideal, but are not practical -that all these railways should be put into one great system and be operated under either private or government control, it is wholly impracticable, and if it were done the Canadian Pacific Railway would deteriorate and ultimately become what the Canadian National Railways are to-day.
Another suggestion is that a new company be formed and given a block of stock in the Canadian National railways, and that the operation be under private control. Weill, if some one will find a group of practical railroad men anywhere who will be willing to pledge forty, or fifty, qr sixty millions of their own money in this enterprise, and undertake to operate the Canadian National railways as co-partners with the people of Canada, risking some of their own money in the venture, then, so far as I am personally concerned, I would have no great objection to the experiment. But I have great doubt as to whether it would be possible to find such a group of men.
Another suggestion is that we abandon the Grand Trunk altogether, leaving it just where it is; that we retain the Canadian National railways as they are and endeavour to operate them as we are doing at present. My position with regard to that is simply this: The Canadian people have been betrayed a great many times in connection with railway problems in this country, but I would look upon it as the greatest possible betrayal of the public in connection with railway matters if we left the Grand Trunk in the hands of the present owners, relieving them of all obligations in connection with the National Transcontinental and the Grand Trunk Pacific, allowing the shareholders of the Grand Trunk to retain that portion of their lines that has some potential advantage, while the Canadian people have foisted upon them those parts with their terminals so to speak, up in the air, and without any prospect of efficient operation. Any one who will look the situation in the face at all, cannot escape the conclusion
that as a railway project the Canadian National railways, the Transcontinental, the Grand Trunk Pacific, and the Canadian Northern cannot be operated without the eastern connections. Why should the Canadian people be asked to spend hundreds of millions of dollars in producing these connections and let the Grand Trunk Railway Company of Canada, who at least were partners with the Canadian people in bringing about this situation, get away with all the advantages while we carry the load? I say again, I would look upon that as the greatest betrayal of the Canadian people that has ever been perpetrated in connection with the whole railway situation; and that is saying a good deal.
Now, the last proposition is the coordination of all the present lines of the Grand Trunk, the Canadian Northern, the Grand Trunk Pacific, the National Transcontinental and the Intercolonial into one system operated under government control. Whatever my personal opinion may be on the merits or demerits of government control of railways, I say, what I have said a good many times, I see no other possible solution than this last proposition. I do not believe it would be possible to bring about a merger with the Canadian Pacific railway such as Lord Shaughnessy suggests, even supposing such were accepted as the solution. I believe the only solution is the proper co-ordination and organization of these systems. Get the Grand Trunk linked up with the Canadian National railways just as quickly as possible and organize the whole system efficiently.
I am not going to criticise any individual or any group of individuals; I am not in a position to do so. I do not know what the exact situation is. I have not had the opportunity, and would not have the capacity if I did have the opportunity, of determining what the facts are. I am confident, however, that there is something wrong somewhere, and I say to the Government, with all frankness, that the time has come when they should find out what that difficulty is:	I do not believe that
there is any reasonable justification for the operating deficits that we have had in the last year, and previous years, on the Canadian National Railways. And just incidental to that I would refer briefly to something said by my hon. friend from North Cape Breton and Victoria (Mr. McKenzie) with regard to the Canadian Northern Railway when he remarked that a gentleman from Western Canada had told him nobody would use that railway.



[Stage Direction]
Let me tell my hon. friend that in accepting that statement he is too easily imposed upon. I have every reason to believe that' the Canadian Northern Railway handled fifty-one per cent of the western wheat crop of 1920, and handled more than fifty per cent of all the stock passing through the city of Winnipeg during the same year. Now these are facts and, such being the case, why is it that railway cannot earn its operating cost at least? Another point is:	Why should
we go to the end of the financial year before the Government, or anyone else, is able to ascertain that these railways are not paying their way? Simply because there is something wrong somewhere in connection with the organization, and I say that without, as I said a moment ago, finding any fault with anybody, or with any particular individual or group of individ-auls. I believe that there are on the Canadian National Railways just as capable railway operators as there are in Canada or in the United States, but there is something the matter with their organization-there is something the matter with their equipment-there is something the matter somewhere, or they would make a different showing from what they are doing; and it is up to this Parliament to see to it that some means is found to bring about an organization that will make this economical operation of our railways possible, and that will get us out of the difficulties that we are in at the present time. I have every confidence that this can be done, but somebody has to take hold of the job with both hands.
Mr. LEVI THOMSON (Qu'Appelle) :: Mr. Speaker, the Finance Minister has brought forward a new Budget. He has clothed it in robes of flowery eloquence, and has held it up with pride to the admiring gaze of his supporters. It plainly belongs to the old protectionist family- though it may be a more lusty child-as did his last Budget, only its weight is greater from a protectionist standpoint. The minister is careful to tell us the tariff will not be revised this session, and he apparently wishes to have it impressed upon us that the duties have not been materially increased. Notwithstanding that, however, he has taken care to give the tariff a canny hoist in ways that he thinks will not be very much noticed. Apparently in the future the price paid for the article imported will not be the basis on which the customs duty will be paid; the duty will be based on the value placed on the article by the officials under the 
minister-a very convenient method which will give the customs tariff a hoist under cover. Then my hon. friend provides that the sales tax on all imported articles shall be higher than on home manufactured articles-another substantial hoist to the tariff. He also advocates a further change in the valuation of goods imported from foreign countries whose currencies have greatly depreciated and he adds:
Under the law, valuations are made in the currency of the country of export and this value has under customs ru.ing been adjusted to the basis of exchange prices. The increased cost of production in the foreign market does not, however, bear a direct inverse relation to the extent of the depreciation of the currency, more particularly so having regard to countries where currencies are depreciated to a greater extent than 50 per cent. It is therefore proposed to provide that any depreciation of a foreign currency greater than 50 per cent shall be disregarded, and that the lowest valuation which can be made will be arrived at by a depreciation of 50 per cent.
It seems to me that in many cases this will have the effect of another considerable increase in our customs tariff. In many of the European countries the depreciation in currency is very much more than 50 per cent. In some cases the value of currency, in comparison with the gold standard, would be not more than one-tenth of the value of our currency. The effect of this, it seems to me, will be that if a Canadian imports from such a country goods which in that country are worth $100 in our currency, the value of such goods in native currency will be $1,000 and by reason of only 50 per cent depreciation being allowed they will be valued at $500 if the policy described is followed out by the Customs Department. If the customs duty of these goods is 20 per cent the importer will therefore have to pay five times the amount which would be $100, or 100 per cent customs duty. One hundred per cent customs duty will be a pretty fair protection and, in my opinion will place us at a great disadvantage in comparison with our American neighbours, where a different plan is adopted. Worse than that it is continuing by artificial means the inflated prices of manufactured goods, while I do not notice that the minister is taking any steps to retain the artificial pfices of what the farmer sells. While the Minister takes care that the inflated prices of manufactured goods shall be retained by artificial means, he does not take any such pains in regard to what the farmer produces. The products of the farmer must be sold in fierce competition with other countries and no relief is pro-

vided; the minister does not seem to consider that any relief is necessary. In my opinion it would not be necessary to give any relief if the minister treated the farmers fairly as compared with the customs duties placed on manufactured goods. These plans of the minister while nominally not increasing the tariff will, in effect, increase it to a very great extent. The minister evidently recognizes that tariff increases are not popular, and adopts this plan of increasing the protection enjoyed by his manufacturing friends when nominally there is no increase at all. While apparently the protection on imported dutiable goods is 20 per cent, I am satisfied these changes will have the effect of increasing it to at least 25 per cent or more. This is an excellent system of camouflage, but camouflage is very popular with the manufacturing and protectionist friends of my hon. friend.
The platform of the Canadian Council of Agriculture has attracted wide-spread attention. Generally Canadian proposals regarding the tariff have been from interested classes asking for increases in the customs tariff on what they produce and want to sell, or for decreases on what they buy. The Canadian manufacturers have pulled both those strings with vigour. They call lustily for a high protective duty on all they wish to sell, and they call almost as lustily for free trade on what they want to buy. The representatives of the farmers who framed the platform of the Progressives adopted a different plan. They evidently recognized that the people were getting tired of these selfish appeals, and instead of asking for protection they actually insisted that everything they themselves produced should be placed on the, free list, while they agree that on many things they purchase the custom duty should be retained for a time at least.
This was so entirely different in spirit from the appeals of the Canadian Manufacturers' Association that it attracted considerable attention and caused something of a panic in that association. Although the association would not for a moment consider the adoption by themselves of any unselfish political policy, they seem to have known enough of human nature to see that those unselfish proposals of the Progressives alongside their essentially selfish and class proposals and appeals would capture the heart of the Canadian people. So like the German when he found his opponents getting too strong for him, and like the minister when he wants to give the tariff a hoist without
attracting too much attention, they adopted a policy of camouflage. They adopted a new name, the pleasing and high sounding name of the "Canadian Reconstruction Association", and under that name they flooded the country with literature. No doubt this literature costs a lot of money, but possibly the association passes it on, like the sales tax, to the customer. That association does not make much use of the terms "protection" and "customs tariff"; its promoters prefer to boom those things by indirect means. They cover their actions under the Canadian flag. They lay great stress on the danger of buying from abroad and profess great reverence for the British flag, but when it comes to a question of trade they have no more use for that flag than they have for an old gunnysack. Trade with Great Britain is to them "foreign" trade, and for trading purposes the Union Jack is a "foreign" flag. They make great efforts to show that it is the patriotic duty of every Canadian to buy only Canadian-made goods. One would infer from their literature that Canadians who are buying foreign goods are disloyal. They especially condemn the farmers' organizations for buying their implements from foreign countries rather than at home, and the Minister of Militia enthusiastically joins in that condemnation, ignoring all the time the very evident fact that the reason why the farmers' organizations are doing that is because our manufacturers have refused to sell to them. It is the old cry over again, "you shall and you sha'n't, you will and you won't; you will be damned if you do, and you will be doubly damned if you don't."
But, after all, who are the Canadians who are buying such great quantities of American goods? I know of no official statistics that show the amount of goods imported by the different classes of our people, but I find that during the fiscal year ending March 31, 1920 the last fiscal year of which we have complete trade returns, , Canada purchased goods from the United States to the value of over $301,000,000, which were duty-free goods. I have gone somewhat carefully into those free lists, and judging by the returns I am quite sure that the great bulk of those free goods were imported by our manufacturers- these people who say we should not import anything from the United States. Besides this, I find that our manufacturers have been given, during the same year over $15,500,000 by way of drawback on customs duty. This possibly represents over another $75,000,000 worth of goo(ls


Mr. CUERIE:: How can they run their factories when you will not buy their goods?


Levi Thomson: I think I have already dealt with that. [DOT] The Grain Growers' organization do not buy from the Canadian manufacturers because the Canadian manufacturers will not sell to them. That is an assertion which is not denied in this House, and the Minister of Militia (Mr. Guthrie) when we attempted to put it up to him during the course of his speech, refused to allow any interruptions because he knew that was coming. He would allow interruptions from any one except from cross-benchers but he was careful not to allow them to interrupt because he knew what was coming. I repeat that the Grain Growers' organization did not buy from the Canadian manufacturers because the Canadian manufacturers would not sell to them.


Mr. CURRIE:: Not true.


Levi Thomson: I believe some of them now are willing.


Mr. COCKSHUTT:: Yes, you had better say so.


John Allister Currie: Mr. Speaker-


Some hon. MEMBERS:: Order.


Some hon. MEMBERS:: Sit down.


John Allister Currie: I have been doing business with the western farmers for twelve years, and will sell to any of them who want to buy a carload of stuff. I have never refused them if they had the money.


Levi Thomson: It is true that they have bought some things, though my hon. friend contradicts completely the Minister of Militia in his statement. But the reason why they did not buy more is because the manufacturers refused to sell to them.


John Allister Currie: There is no truth in that.


Mr. COWAN:: What manufacturers?


An hon. MEMBER:: All manufacturers.


Walter Davy Cowan: What manufacturers?
I just want to ask that question.


Levi Thomson: My hon. friend is not entitled to interrupt me unless I give him permission to do so. However I refer him for an answer to the hon. member for Maple Creek (Mr. Maharg), the hon. member for Mackenzie (Mr. Reid) and the hon. member for Marquette (Mr. Crerar).


Walter Davy Cowan: You are making assertions that you cannot prove.


Levi Thomson: I am
making assertions on the basis of what I have been told by thoroughly reliable people, and that is all the assertion that my hon. friend can make at any time. In fact, he is often ready to make assertions when he has no such authority.


Walter Davy Cowan: The hon. gentleman cannot answer the question.


An hon. MEMBER:: He has answered it a dozen times.


Levi Thomson: I say
that under the present tariff we shall be paying to the manufacturers of Canada a bonus equal to $500,000,000 a year.


John Allister Currie: That is not true. You are paying no bonus.
Mr.	THOMSON	(Qu'Appelle) :	My
hon. friend is not entitled to stand up in this House and tell me that I am saying was it not true.


John Allister Currie: The hon. member knows very well that he is not telling what is true.
Mr.	THOMSON	(Qu'Appeile):	My
hon. friend knows very well, if he has studied the question at all, that what I am telling is the truth. In receiving such bonuses as this, they should see that they give steady employment to their men.


John Allister Currie: The hon. member does not help any unemployment.
Mr.	THOMSON	(Qu'Appelle):	That
is a duty in which they have lamentably failed. I must say that the present Budget is not to my liking at all. It not only, in effect, makes a great increase in the protective tariff, but provides for the dropping of the business profits tax and replaces that with an addition to the Sales

tax. Taxes'may be divided into classes in various ways. We may class some as direct taxes and some as indirect taxes. If it true that both the tax dropped and the additional tax are direct taxes and, therefore, they are preferable to indirect taxes such as the customs duties. We may also, however, divide taxes into those that are based on the expenditure of the person who pays them and, on the other hand, those that are based on his income. I believe the taxes should, as far as possible, be levied on those best able to pay them, and in order to make the persons best able to pay do their part, only one course is possible and that is to base our taxes, as largely as possible, on income rather than on expenditure. That is something that we should always keep in mind. The poor man expends all his income and, according to the system of taxation which has obtained in the past, he must pay a tax on all of his income, while the rich, who do not need to pay out all of their income, escape taxation on the part of their income which they do not need to spend on their living. The Minister of Finance is apparently anxious to get back to the old system. His predecessor somewhat reluctantly adopted the plan of levying part of his taxes on income, in other words, taxing those who were best able to pay; but the present minister seems anxious to depart from that principle, when he drops the business profits tax, which is chargeable against income, and adopts in its place taxes of another description which are based upon the expenditure of the person paying. Therefore, it is plain that he is relieving the rich men of the country at the expense of the poor.
The United States Secretary of the Treasury has recommended to Congress the repeal of the excess profits tax, but he also advocates that the excess profits tax should not merely be repealed but be replaced by some other tax upon corporate profits. He wants to keep the tax still against income instead of expenditure.


Mr. HAROLD:: Does the hon. member not know that under present regulations all business profits are taxed 10 i per cent with an exemption of only $2,000 on each company's profits?


Levi Thomson: I am not discussing that point.


John Allister Currie: The hon. member is
dodging it.


Levi Thomson: I am dealing with the fact that the Minister

of Finance is dropping a tax on income and is putting in its place a tax on expenditure. I am trying to produce some arguments in favour of taxing income rather than expenditure. I am not dealing with the point that my hon. friend is dealing with at all. I was referring to the recommendation made to Congress by the United States Secretary of the Treasury.
I notice that he makes another recommendation which I think might be taken to heart by the minister. He says that the nation cannot continue to spend at " this shocking rate." In his opinion, the proposed expenditure for the coming year of $37 per capita is expenditure at a shocking rate. I wonder what he would say of our per capita expenditure of $60 to $70.
We have before us not only the Budget, hut an amendment with which I propose to deal very briefly. I might say that the amendment that I should like to see adopted in this case would set out the fiscal policy laid down in the platform of the Canadian Council of Agriculture. I think it would be much better than the proposed amendment; but according to our Canadian rulings, we can have only one amendment, and we have to deal alone with that. In some respects, this amendment is better than that presented to us last year. It expresses regret that the Government has made no proposals for any reductions in the tariff, and I thoroughly agree with that. It also regrets that the tariff is based upon the principle of protection, and I also agree with my hon. friend (Mr. Fielding) in that regret. The amendment claims that the aim of legislation should be to make taxes as light as circumstances will permit, and it also claims that encouragement should be given to industries that may reasonably be expected to create healthy enterprises giving promise of success. That is one of the most important things which we must keep in mind in dealing with our fiscal legislation. We have been trying to pamper and pap-feed industries which never should have been established in this country. If we had adopted the principle laid down by the hon. member for Shelburne and Queen's, we would stop that sort of thing and we would encourage industries that the Almighty intended to be carried on in this country.


Henry Lumley Drayton: My hon.
friend has referred to pap-fed, improper industries, industries that never should have been started in this country. Would he be kind enough to give the House the names of the industries to which he refers?


Levi Thomson: I have
not undertaken to give the names of the industries. My hon. friend should be very much better posted than I am in that regard. I will say this, that any industry that asks my hon. friend for a protection of 25 or 30 per cent should never have been established. My hon. friend should tell them to get out That is the best test I can give to him. Let him find any industries willing to work on a 10 or 12 per cent customs tariff and let him encourage such industries in any way he can. He will then be encouraging industries that can be carried on successfully in Canada and that the Almighty intended to be carried on in Canada. That is the best answer I can give to my hon. friend, and I hope he will take it to heart.
The amendment further advocates such legislation as will reduce the cost of implements of production required for the efficient development of the natural resources of the Dominion. That is also a very good point, and the best way to reduce the cost of those implements, and amongst them agricultural implements, is to put them on the free list. In that way the chances of the farmer to make a living fin these serious times will be very much increased. On the whole I think it is an amendment that should be accepted by me although it does not go as far as I would wish.
Some of my hon. friends opposite have had a great deal to say about free trade and free traders in this House during the last few years. The term "free trade" has been used rather loosely in this country- I can remember, as no doubt can other hon. gentlemen something of the old election campaigns in this country in 1876 and 1878, when the National Policy came before us for the first time. We remember that those who supported a tariff of an average of 12 and 13 per cent were called free traders, while those who wanted 20 per cent all around were called protectionists. That is how the term first came to be used, and it still hangs on to some extent. We apply the term "free trader" to those who want free trade or a low tariff. Hon. gentlemen opposite are now trying to create the impression that even the Progressives are rather indefinite on this question of free trade, and are rather undecided as to what their attitude on the question should be. I do not think that is so; I think there is no justification for that criticism. Let me give my own position on the question of free trade, if you will, or low tariff, and I believe that my

.position is one that has been generally accepted by the Progressive party. My ideas along that line are -well set out in the fiscal plank of the Canadian Council of Agriculture. No one need have the least doubt where the Progressive party stands on that question. No party that ever existed has made its position so clear when out of office as the Progressive party has done with regard to that particular plank, and any one who wants to know where the Progressive group stands can look up that plank and find out without any trouble at all. If any one does not know, there is no excuse for his ignorance; it is simply unjustifiable and inexcusable.
We have heard a great deal about the Liberal platform of 1893, and particularly about one thing that was suggested at that time, namely, that the goal of the Liberal party was free trade as they have it in England. I think that was a very good gftal, and that we should, do well always to keep a goal of that kind before our minds. I am sorry that the Liberal party did not make greater exertions to reach that goal more quickly. Hon. gentlemen opposite seek to leave the impresion that we are divided in our views on this question on this side of the House-that many of us would like to retain a certain amount of customs tariff, while others want the whole thing abolished at once. I have never heard any member of the Progressive group suggest that we should do away entirely, at one fell swoop, as the hon. member for Marquette (Mr. Crerar) has put it, with the customs tariff. The hon. member for Red Deer (Mr. Clark) has frequently directed attention to the fact that it took some twenty years in England to accomplish actual free trade, and I have always heard him advocate in this House that we must proceed along these lines gradually, although always keeping the goal in view. It may be necessary for a time to retain some customs duties on certain lines of manufactures, but I do not think there is any such need as our hon. friends opposite would have us believe. As a matter of fact, we know that in at least four particular lines of goods used generally throughout the country we have adopted the policy of free trade, not by any agreement with our manufacturing friends, but in answer to a great clamour from the public and in the face of tremendous opposition by the manufacturers. Those four lines to which I refer are cream separators, binder twine, barbed wire and flour. I shall not take up the time of the 
House to repeat what was predicted at that time, but we all remember how ruination was predicted. In every one of those lines we are not only manufacturing goods for Canadians in Canada, but we are exporting to a very large extent, even barbed wire, though not to such a great extent as in the other lines.
While it may be true that it would not be wise to do away at once with all customs duties, I say that in so far as agricultural implements are concerned there is not one bit of justification for retaining a single jot of customs tariff on any of them. I think in all our leading lines of agricultural implements our manufacturers are not only able to supply our home demands, but are exporting largely in competition with the world, and if they can face the competition of the world outside of Canada, why cannot they face competition inside Canada?
I want to repeat what I said in answer to my hon. friend the Minister of Finance on a previous occasion, that an industry that cannot thrive on a 10 or a 12, or at the outside a 15 per cent tariff, is not suited to this country, should never have been established in this country, and is a curse instead of a benefit to this country. I believe that our experience has shown that those industries which it was predicted could not possibly thrive under free trade, have thriven. The first and most important thing we demand is that food stuffs and the agricultural implements necessary to produce those food stuffs shall be freed.
I think more might be done in the way of looking after wider markets for the things we produce. I have said something in this House before as to the necessity of having trade agents in the United States and elsewhere, to do something in the way of finding markets for our agricultural as well as our manufactured products. We export more agricultural than manufactured products, and I think they should receive more attention than they have in the past.
We have had a serious situation in Canada for some time on account of the ending of the war. We have been passing from war to peace, and we are experiencing a period of depression. We have no objection to bearing our share of these trying times, but we feel that the farmers of Canada have had to bear more than their share, and that the manufacturers, who have been bonussed so extensively by the treasury, have not done anything like their share. The hon. member for Red Deer (Mr. Clark) has drawn attention to the fact that one of his constituents sold two cattle hides

weighing 129 pounds at 1 cent a pound; that he got $1.29 for them.
I know of a worse case than that. I saw a report in the paper the other day about a farmer at Melita who shipped two hides to Brandon and received in return, after paying freight and commission the magnificent sum of 16 cents-just a little more than enough to buy a pair of shoe-laces. It would take about 100 or 150 of these beef hides at that price to buy a pair of boots for the farmer made out of just one little corner of one of the hides. Is there any justification for that?
I have known of worse cases than that, where people sent in hides and there was not enough received from them to pay the commission and freight. I have known of cases where people were compelled to sell cattle this fall-good canners-because of the shortage of food. They shipped the cattle to Winnipeg on commission and did not get enough to pay the commission and freight. But we have not seen any wonderful reduction in the price of canned goods, or any wonderful reduction in the price of boots and harness. It is unfair that it should take from 100 to 150 hides to buy a pair of boots, and from 400 to 500 cow hides to buy a set of harness, but that is about the position in which the farmers^ of Canada are placed because the Canadian manufacturers refuse to do their share in restoring rational conditions.
Without wishing to take up very much more time, I might refer briefly to one or two suggestions in regard to the raising of revenue. My hon. friends say that we should not only criticise the present system of taxation, but that we should suggest some other means of raising money, because we all admit that large sums of money are necessary. Well, it is quite true that a tremendous sum of money must be raised, but we must get that money in such a way as will ensure, as far as possible, that every dollar shall go into the revenue of the country, and not, as under the present system of customs tariff, have one dollar out of every four go into the treasury, the other three finding their way into the manufacturers' pockets. That is not the way to raise a revenue, especially when we are so heavily taxed.
Now, we have made some suggestions as to new methods of taxation, and they have been adopted after a tremendous amount of kicking on the part of the Government. But we have made other suggestions that have not yet been adopted, and I am glad to see the Minister of Finance in his place
again. Perhaps he will try to take them into consideration. For instance, we have suggested an inheritance or death tax, or whatever you like to call it. That would no doubt bring in a great deal of money, and, it seems to me, it would be a much fairer way of raising revenue than our customs tariff. The suggestion is also made that there should be a tax on the unimproved value of lands. Our protectionist friends are very anxious to scare the farmers on this question. I do not know whether the minister has tried to intimidate them or not, but I have seen a great many scare headlines on the question, and I have heard a great many arguments advanced to frighten the farmers into believing that this tax would operate entirely against them. Surely it is a queer system of taxation that would apply only to farm lands. We could assuredly adopt some fair system of taxation on the unimproved value of lands, a system that would be fair to every one. If any one should ask me, as my hon. friends just now seem to be very fond of putting questions, I am not in a position to say just what the unimproved value of lands in the city of Winnipeg would be in comparison with the unimproved value of farm lands in the province of Saskatchewan.


John Allister Currie: Are you in favour of a tax on improved lands?


Mr. ARCHAMBAULT:: Stand up, please, when you ask a question.


Levi Thomson: I am not talking about that; I am suggesting a tax on the unimproved value of lands.


John Allister Currie: You do not want a tax on improved lands?


Levi Thomson: I do not suggest a
special tax on improvements of land, neither do I suggest any special tax on the fine house which I presume my hon. friend has on his city lot; but I want to tax the unimproved values of land.


Walter Davy Cowan: There has been a great deal of misunderstanding on that point. Is your proposed system the Henry George system of single tax?


Levi Thomson: I do not care what you call it; you had better wait and see what I advocate, before interrupting me.


Walter Davy Cowan: I want to get-


Some hon. MEMBERS:: Order.


Walter Davy Cowan: Just a minute. I want my hon. friend to say-


Some hon. MEMBERS:: Order.


Walter Davy Cowan: If you are scared, all right.


Levi Thomson: If the Henry George system is a fair system, then take it.


Walter Davy Cowan: Why do you not answer my question?


Some hon. MEMBERS:: Order.


Levi Thomson: Be patient; wait and see whether I am in favour of the system or not.


Walter Davy Cowan: You are scared of being caught.


Levi Thomson: I am not very much
in fear of the hon. gentleman's ability to catch me; it would take a better man than he to do s'o. I was discussing the suggestion of taxation on unimproved values of land, and I have not yet said whether or not I am in favour of it. So that my hon. .friend, before he starts to criticize me, had better wait until he knows what my views are on the question. Let me say, for the first time, I believe the system is one that must be adopted some time or other in our country. Whether the present time is opportune, in view of the very unsettled conditions in real estate in our cities and towns, is a question that should receive some consideration before the system is adopted. But we should at once take steps, at any rate, to put a tax on unoccupied and unused lands.


John Allister Currie: What about farm lands?


Some hon. MEMBERS:: Order.


Levi Thomson: I say, we should tax
unoccupied lands, and there are many reasons why that should be done. I do not propose to take up the time of the House discussing them, but I might mention one reason, and that is the railway situation. I think that the adoption of this tax would relieve the railway situation to a considerable extent. It is my opinion that every owner of unoccupied land, whether in city or country, should be obliged to put a value on that land, and the land should he taxed on such valuation by the Federal Government. And the owner should be compelled to sell the land at that value whenever he gets a chance. This system would have the effect of locating settlers, who come to the country, nearer the railroads. I think my hon. friend from Regina will agree with that.


Walter Davy Cowan: I do not.


Levi Thomson: At any Tate, it would undoubtedly cause the settlers to settle near

the railway tracks. In this connection, I do not think it would be a bad idea to do away entirely with free homesteads. If we compelled the owners of unoccupied lands to sell, on their own valuation, at a reasonable price whenever the opportunity offered-and if you put a heavy enough tax on such lands the owners would have to sell at a reasonable price-we should then have, near the railway tracks, settlers who would produce traffic instead of rushing to outside localities and continually clamouring for branch lines, thus compelling us to increase our expenditures. I think we might well adopt this principle and put a heavy tax on all unoccupied and unused lands; and by some means or other we should compel all owners of those lands to put a fixed price upon them and to sell them, whenever they get the opportunity, upon reasonable terms, either to private persons or to the Government. I believe we could get considerable revenue under that system, and the railway situation would be very much improved thereby. At least, the suggestion is worth trying. Now, there are other means of taxation which have been suggested from. time to time, but I do not propose to suggest any more at the present time.


Walter Davy Cowan: You had better not. Why not start a new party of your own?


Levi Thomson: My objection to the Budget is that it greatly increases the customs tariff and in place of putting a tax on income provides for further taxation on expenditure. I will support the amendment because I believe it is in the right direction while the Budget is in the wrong direction.
On the motion of Mr. Lang the debate was adjourned.
On the motion of Right Hon. Mr. Meighen the House adjourned at 12 midnight.
Friday, May 13, 1921.